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State owned bank's home lending slows, but still closing in on NZ$10 bln

State owned bank's home lending slows, but still closing in on NZ$10 bln

The slowdown in the growth of Kiwibank’s new mortgage business continued in the June quarter with the state owned bank writing about NZ$307 million worth of new business.

That’s less than the NZ$347.4 million growth the bank recorded for the March quarter, marking Kiwibank’s slowest mortgage growth since the June 2008 quarter when it wrote about NZ$261.7 million worth of new business.

Kiwibank’s General Disclosure Statement (GDS) for the June year shows its residential mortgage lending rose to NZ$9.6 billion by June 30, up from NZ$9.29 billion at March 31.

Despite the slowdown Kiwibank's mortgage lending growth has been spectacular over the past two years, growing faster than the big four banks, as it has competed for new business through offering discounted fixed mortgage rates and variable rates. Since the June 2008 quarter, Kiwibank's residential mortgage book has grown by about NZ$4.7 billion.

However, the bank’s much publicised capital restraints, culminating in Wednesday’s announcement of an agreement for the government to supply Kiwibank’s parent NZ Post with an uncalled capital facility valued in the "low hundreds of millions" of dollars, has seen mortgage growth slow.

Overall the bank increased lending by NZ$1.93 billion, or 23%, to NZ$10.42 billion in the year to June, well down on its 52% lending growth the previous year.

Revenue, capital boost from parent

Meanwhile Kiwibank received NZ$54.67 million of annual revenue from managing NZ Post’s payment services activity.This was up NZ$2.6 million from the year to June 2009 and represents about 42% of Kiwibank’s "other income "with the balance stemming from banking and lending fees.

Kiwibank also booked annual net interest income of NZ$133.39 million, down 18% year-on-year, plus a NZ$36.3 million gain from financial instruments such as derivatives, compared to a loss of NZ$4.6 million the previous year. Kiwibank, which also received a NZ$15 million capital injection from NZ Post in December, made a June year after-tax profit of NZ$45.8 million, down 13%.

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Steptoe, we will do an article tying all the major bank figures together once all the bank's latest GDS's are out.