ASB, National rule home-loan market

By PAULA OLIVER

ASB Bank and the National Bank have outstripped their competitors and captured the biggest slices of mortgage-lending growth amid Auckland's housing boom.

A KPMG banking survey released yesterday showed that the two banks increased their mortgage books significantly in the 2002 year - ASB's increasing by as much as 19.3 per cent.

The shift saw ASB pass ANZ and take over its position as the third largest mortgage lender.

KPMG chairman of banking Andrew Dinsdale yesterday said that the growth was largely due to Auckland's hot housing market.

ASB had pushed itself forward, and had been shown to be strong in its traditional geographical market.

"It's a stellar performance from ASB. It's had a dramatic impact on the face of mortgage lending in New Zealand," Dinsdale said.

The National Bank remains the biggest mortgage lender, with $17.3 billion in its book, the survey shows.

Despite it being the only major bank to keep its head office in Wellington, the National Bank could also be shown to have strong Auckland roots - a reason for its being a beneficiary of the region's booming housing market, Dinsdale said.

The roots could be traced to its acquisition of Countrywide Bank, which was largely based in Auckland.

Interestingly, Dinsdale said, the ASB Bank and the National Bank can also be found at the top of customer satisfaction surveys of the big five banks.

ANZ, which has routinely found itself at the bottom of satisfaction surveys, was the only major bank to experience a reduction in total lending assets in 2002. They fell 0.6 per cent.

The survey showed that the 18 registered banks experienced an overall increase of 3.6 per cent in total lending assets over the year.

Mortgages represented 48 per cent of their lending.

As a group, the registered banks achieved another year of record profitability.

Overall net profit after tax was up almost 26 per cent to $2.6 billion.

Westpac was the most profitable of the big banks.

For the first time in 12 years of surveying, the banks' interest margin - a key factor in measuring a bank's profitability - rose.

The interest margin is measured by taking net interest income and dividing it by average interest-earning assets.

The New Zealand industry's margin was 2.5 per cent. National Bank, Westpac and ANZ each boosted theirs to more than 2.7 per cent.

The industry performed well in terms of efficiency.

The survey found that after years of staff cuts, some banks were increasing numbers.

Dinsdale said that the failure of AMP to make a profit in its "virtual banking" experience, coupled with the increase in branches across the country, showed a shift in attitude from some banks.

"While technology-based channels may be more effective in meeting customers' routine transactional banking needs, there appears to be an increasingly high value placed on quality financial advice and personal service."