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Competition offsets mortgage repricing benefit - ANZ


ANZ says margin benefits from the repricing of mortgages in this country are being offset by strong competition for deposits.

NZPA
Fri, 18 Feb 2011

ANZ says margin benefits from the repricing of mortgages in this country are being offset by strong competition for deposits.

The bank today reported a 27 percent rise in first quarter underlying profit in its overall operations to $A1.4 billion ($NZ1.87b).

ANZ said group margins nudged up across the quarter but the rate of growth slowed as high funding costs largely offset the gains from asset repricing.

Bad debt charges nearly halved to $A294 million in the period and its Tier 1 capital, a measure of the bank's ability to absorb potential losses, increased to 10.3 percent from 10.1 percent three months earlier.

Group lending grew just 2 percent quarter on quarter which puts annual growth well below the near 10 percent historical average for Australian banks.

In this country, with the economy slowly recovering, lending was flat quarter on quarter, while deposits grew 4.2 percent.

"Pricing benefits from the roll-off of fixed rate loans and switching to variable rate loans continues to flow through, however the margin benefit from that repricing has been largely offset by strong deposit competition," ANZ said.

Variable loans comprised 49 percent of the mortgage portfolio at the end of 2010, compared to 26 percent at the end of 2009.

ANZ New Zealand had started to put in place plans to improve operational efficiency, including a move to one IT platform and a new regional management structure, aimed at significantly improving service levels and business outcomes over the medium term, the bank said.

It was expected that a one-off charge of about $A120m would be incurred in the first half of 2011 to fund the integration of IT systems and related costs which would be excluded from underlying profit.

NZPA
Fri, 18 Feb 2011
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Competition offsets mortgage repricing benefit - ANZ
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