Banks earn about $610 profit for each person in NZ

Last year registered banks in New Zealand made about $610 profit from every man, woman, and child in the country - thanks in part to the real estate boom.

KPMG's financial institutions performance survey for 2003 found that registered banks posted a collective net profit after tax of $2.45 billion, compared with $2.74 billion in 2002.

At September 30 last year, New Zealand's population was 4.02 million, meaning each person contributed about $610 to the banks' collective tax paid profit.

While collective npat was down 10.5 per cent in 2003 from 2002, underlying performance improved 12.3 per cent, from $3.75 billion in 2002 to $4.21 billion last year.

There were 18 registered banks operating in New Zealand in 2003 (from 17 in 2002), and they had a collective asset value of $205.39 billion ($194.06 billion).

KPMG banking and finance group chairman Andrew Dinsdale said the banks' operating expenses had increased 9 per cent over the period, largely through one-off costs associated with National Bank taking on ANZ Bank's accounting policies.

ANZ's $6.2 billion acquisition of National from United Kingdom-based Lloyds TSB Group was a salient point in the 2003 banking year, he said.

As a result, the big five banks - Westpac New Zealand, Bank of New Zealand, ASB Bank, ANZ, and National - were now all Australian owned.

Trend analysis showed the so-called top five had been increasing their underlying profits since 1993, with Westpac leading the way.

Mr Dinsdale noted that lending in the registered bank sector increased by $9.7 billion, or nearly 14 per cent.

"Lending for mortgages over residential property still dominates our analysis of lending," Mr Dinsdale said.

"At 51 per cent of total lending, it is up from 49 per cent in 2002 and consistent with the continuing boom in the real estate market," he said in a statement.

Real Estate Institute of New Zealand figures showed median house prices increased 19 per cent to $240,500 in the 12 months to March 2004.

The property boom - fuelled by low mortgage interest rates and strong net migration - had flattened in early 2004.

"In spite of the fact that rising prices are making first home purchases more difficult, it would appear from the lending statistics that the great Kiwi tradition of owning you own house continues unchecked," Mr Dinsdale said.

National continued to dominate the mortgage market, its $20.5 billion book accounting for 25 per cent of the total.

"Strong growth was also recorded by BNZ and ASB Bank, but in percentage terms, Kiwibank, with growth exceeding 1000 per cent, excelled, a reflection of its start-up status," Mr Dinsdale said.

"The mortgage lending market is arguably the most competitive market in the New Zealand financial services industry, given the number of participants involved," he said.

"These extend from banks, finance companies and savings institutions to specialist mortgage originators."

Mr Dinsdale also noted the rise "non-conforming mortgages", or those outside normal lending criteria.

"Today it seems that a poor credit history and uncertain income flows do not necessarily preclude a person from obtaining a mortgage and owning their own home," he said.

Meanwhile, the number of staff employed by registered banks increased by 840, or about 4 per cent, during the year.

The rise in staffing numbers was in part linked to the growth of Kiwibank, but also because registered banks had realised that "customers like to be able to deal with real people".

- NZPA