As finance company Marac and two building societies work towards creating a bank with assets of NZ$2.2 billion, the country’s biggest bank has put their size into stark contrast, revealing its total asset base shrank by more than four times their combined value in the year to March.
ANZ’s New Zealand branch general disclosure statement for the six months to March shows the NZ Banking Group had total assets of NZ$123.5 billion at March 31, down NZ$9.46 billion, or 7%, from NZ$132.9 billion a year earlier.
Pyne Gould Corporation revealed plans on Tuesday to merge its subsidiary Marac with the Canterbury Building Society and the Southern Cross Building Society to create a financial institution with NZ$2.2 billion of assets. The three aim to seek a banking licence from the Reserve Bank. See related story.
ANZ’s deposits from New Zealand customers, a key funding source given new Reserve Bank regulations and the increased cost of offshore wholesale funding, fell by NZ$297 million to NZ$51.8 billion.
The Reserve Bank introduced a core funding ratio (CFR) in April which tasks banks with sourcing 65% of their funding from domestic retail deposits or wholesale funding with maturities of more than one year. The central bank plans to increase the CFR to 70 and ultimately 75% by mid-2012.
When overseas deposits are added, ANZ’s total customer deposits were down NZ$292 million to NZ$59.27 billion.
The bank’s wholesale funding fell NZ$4.6 billion, or 9%, to NZ$45.7 billion. This left total funding at March 31 at NZ$104.9 billion, down NZ$4.9 billion, or 4.5%, year-on-year.
ANZ's lending was also down with total housing term loans NZ$66 million lower at NZ$53.47 billion. Total net loans and advances were down to NZ$95.7 billion from NZ$98.5 billion.
Although ANZ’s operating income fell 3.5% to NZ$1.6 billion, operating expenses rose 1.2% to NZ$748 million. Net fee income fell NZ$9 million, or 3%, to NZ$274 million. ANZ's previously disclosed net profit for the six months to March of NZ$386 million, down 8.5% from the same period of the previous year, was just 0.1% as a percentage of average total assets compared to 0.7% a year earlier.
Meanwhile, ANZ paid its Australian parent a NZ$393 million dividend in the half-year. That's compared to A$1 billion, or NZ$1.43 per share, for the full year to September, paid in March 2009 although last year the parent company did also take up NZ$1 billion worth of redeemable preference shares.
* This article was first published yesterday in our paid subscriber email for bank executives, regulators and other industry experts. Subscribe here or email firstname.lastname@example.org