Money in the bank not managed funds or superannuation shows survey

Investors are putting their money into term deposits rather than managed funds, superannuation or life insurance according to figures compiled by a bank interest rate tracking company.

More than $67 billion was invested in bank and non-bank institutions in New Zealand at the end December 2004, up 12.3 per cent on a year earlier.

Interest.co.nz which compiled the data said investment in bank term deposits at $55 billion made up more than 80 per cent of this.

Finance company debentures attracted $8.7 billion up 18.2 per cent on the year earlier while unsecured deposits in other non-bank institutions, mainly building societies and organizations like the PSIS, held $3.8 billion of investors term deposits and grew 14 per cent from a year earlier.

"To put the term deposit market in perspective, for the year to 31 December 2004, New Zealand exported goods worth $30.7 billion, and imported goods worth $34.9 billion. New Zealand term deposit balances exceeded the sum of this annual trade in imports and exports," interest.co.nz said in a statement.

Managed funds, life insurance and superannuation invested in New Zealand amounted to $34.2 billion, up just 2.9 per cent.

ANZ-National has the lion's share of the term deposit market with 31.9 per cent, plus the 3.2 per cent held by its wholly owned finance company, UDC. Term deposit balances at the ANZ-National grew 13 per cent in the year to the end of 2004.

Among other banks, Kiwibank's term deposit balances grew fastest, up 250 per cent during 2004.

BNZ term deposits however, grew only 6.2 per cent in the same period and HSBC's term deposits actually fell, going down by a quarter of a billion dollars, as its drive to retain the accounts it acquired from the old AMP Bank did not work, interest.co.nz said.

UDC is the largest finance company with $2.1 billion in secured debentures. However, these term deposits were static year-on-year growing 3 per cent in the first half of 2004, but falling back 3.5 per cent in the second half.

The Hanover Group (Elders Finance, United Finance, Nationwide, and FAI Finance) is the next largest non-bank finance company.

Their secured debentures grew by more than $200 million between 2003 and 2004, and by December 2004 they had deposits exceeding $1 billion, growing at close to 30 per cent per year.

Most of the larger building societies grew at about the same rate as the market averages, although the stand-out performer was HBS Building Society from the Hawkes Bay, posting 34.9 per cent deposit growth in 2004.

On the other hand Auckland's Southern Cross Building Society was a laggard, showing only modest 3.9 per cent growth in deposits.

- NZPA