ICBC (NZ), the local unit of the Chinese bank that is the world's biggest lender by assets, has lifted its loan book by 343 per cent, by tapping into the growing economic relationship between China and New Zealand to write more mortgages, commercial and syndicated loans.
In its second fullyear of operations, ICBC lifted loans and advances to customers to $379.9 million in 2015 from $85.7 million in calendar 2014. Net interest income rose 105 per cent to $6.1 million.
ICBC became a registered New Zealand bank in November 2013 and has since been joined by Bank of China (NZ) and China Construction Bank (NZ). Its parent has some US$3.6 trillion ($5.2 trillion) of assets, operates in 40 countries with 4.6 million corporate customers and 411 million individual customers.
Chairman Don Brash, the former central banker and leader of both the National and Act parties, said ICBC is aiming to expand in the local market, partly by building its domestic funding base.
"We're close to the limit of expansion on our existing capital base," Brash said.
The biggest growth came from the lender's residential mortgage book, which soared to $102 million last year, from $11.2 million a year earlier. That's still tiny, with even TSB Bank leaving it in the shade with more than $2.7 billion of residential lending last year. Corporate loans jumped to $164 million from $50.7 million and syndicated loans rose to $114 million from $24 million.
Currently, its floating mortgage rate is 5.6 per cent, similar to those offered by the big four Australian-owned banks.
ICBC aims to be "a bridge between New Zealand and China" and offers services including remittances back to China in yuan, the UnionPay bank card that is accepted in both countries, and an account opening witness product, which allows a local account to be opened via a branch of the parent bank in China.
Brash said having started from a zero base two years ago, with $60 million of capital, percentage growth "by definition is very fast".
He said there was a common misperception that people could borrow overseas at "zero interest" and use the funds to buy property in Auckland, driving up prices. That idea was "nonsense" and also didn't acknowledge that using offshore funds involved added currency risk.
