HSBC records just NZ2.2 mln quarterly mortgage book growth, profit hit by IT costs

HSBC records just NZ2.2 mln quarterly mortgage book growth, profit hit by IT costs

By Gareth Vaughan

The New Zealand unit of international banking behemoth HSBC recorded a 9% drop in March quarter profit as spending on information technology (IT) pushed operating expenses up 21%.

The bank's General Disclosure Statement (GDS) for the three months to March 31 shows profit after tax of NZ$12.11 million, down NZ$1.2 million, or 9%, from NZ$13.36 million in the same period of last year. The drop in profit came as the bank squeezed out a less than 1% rise in net interest income, up NZ$94,000 to NZ$21.04 million, and operating income fell NZ$24,000 to NZ$33.09 million. In contrast operating expenses climbed NZ$2.67 million, or 21%, to NZ$15.58 million from NZ$12.9 million.

John Barclay, HSBC's head of retail banking and wealth management, said during the March quarter this year the bank made a "significant investment" in technology as it strives to provide "world class banking services" to customers.

"Customers will be aware of the upgrades to internet banking, some of which have already been made available. Other programmes will be rolled out over the coming months," said Barclay.

The increase in operating expenses offset a NZ$1.35 million drop in income tax.

Mortgage book up just NZ$2.2 million

Meanwhile, HSBC's mortgage book, based on its loan-to-value ratio table in the GDS, increased by just NZ$2.2 million in the three months to March. That compares with a drop of almost NZ$5 million in the December quarter last year and increase of just over NZ$46 million in the September quarter. The GDS shows a residential mortgage book of NZ$983.6 million at March 31 versus NZ$981.4 million at December 31.

HSBC's overall "advances to customers" rose NZ$24.7 million during the March quarter to NZ$3.15 billion. The bank's total assets fell NZ$32.3 million to NZ$4.69 billion and total liabilities fell by NZ$308.17 million to NZ$4.68 billion led by a NZ$245.7 million drop in debt securities to NZ$473.5 million. Customer deposits rose NZ$71.9 million to NZ$2.49 billion.

Through its "Premier" loans HSBC offers the lowest advertised fixed interest rate by a bank through its six month 5.49% per annum, or 4.99% with insurance, rate.  See all bank mortgage rates here.

Since introducing Premier, its premium international banking service in New Zealand in October 2008, HSBC has been focusing on high net worth customers. Premier customers’ must have mortgages worth NZ$500,000 or savings of NZ$100,000 to qualify for a loan.

HSBC in May raised NZ$200 million through an issue of five-year floating rate notes to institutional investors. The bank also recently announced that Noel McNamara, currently head of commercial banking at HSBC in Australia, will replace David Griffiths as its New Zealand CEO from September 1.

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