Valocity valuation chief James Wilson reveals why some real estate prices have fallen over the last quarter, as well as his forecasts for what lies ahead. Video / NZ Herald
A strong housing market helped increase ANZ NZ’s first-half profit by 18 percent to $ 1.096 billion.
In the six months to March 31, the operating profit of the country’s largest bank grew by 6 percent to $ 2.144 billion.
Although its operating costs also rose 8 percent to $ 824 million due to high compliance costs. The bank’s cash profit grew by only 1 percent to $ 968 million.
ANZ NZ CEO Antonia Watson said the solid result reflects a steady strengthening of the housing market despite recent hurdles, including due to rising interest rates.
“Spring and summer are the busiest times for the housing market, and although the value of real estate has fallen 4.1 percent since its November peak, it is still much higher than a year ago.”
The bank increased its share of the housing loan market from 30.38% in September 2021 to 30.66% on 22 March.
During this time, the official cash rate rose significantly from a record low of 0.25 percent to 1.5 percent in April, which boosted mortgage rates.
Watson said the New Zealand Reserve Bank has taken a reasonably cautious approach to the housing loan market by tightening restrictions on the cost of credit.
“Also affected by government decrees, which in December amended the Law on Credit Agreements and Consumer Finance.”
Net loans and advances grew by 3.8% in the first half of the year, while deposits grew by 3.4%.
Watson said that while New Zealand’s economy was again more stable than expected in the first half of fiscal year, consumer sentiment has changed markedly.
“With rising inflation and interest rates, as well as rising uncertainty around the world, we are beginning to see New Zealanders tighten their belts, and the current environment remains a challenge for many small and medium-sized businesses.”
She said the bank is closely monitoring the situation given the continuing economic uncertainty due to Covid-19, significant supply chain problems and growing geopolitical tensions around the world.
Provisions for loan impairment were equal to the allocation of $ 20 million for half.
“Since the first closure in 2020, many New Zealanders have been cautious about their finances, and this seems to be continuing. Our data show that while interest rates were low, people took the opportunity to repay debt where they could, and they also had time their saving habits ”.
Watson said ANZ data shows that more than a third of customers are ahead of their home loans by six months or more.
Business and institutional clients continued to manage well due to constant uncertainty and disruptions caused by the pandemic in the first half of the fiscal year.
In contrast to the growth of housing lending, lending to non-residential businesses to business clients and institutional clients remained subdued during the first half of the year, increasing by $ 900 million.
“Many of our business clients tell us that borrowing more money is often not the solution. While we work with those seeking additional working capital support, many are using their existing cash or funds, ”Watson said.
The bank’s fund management unit has suffered from the loss of default vendor status.
In December, the company transferred $ 513 million to KiwiSaver’s default customers to newly designated default vendors, meaning that KiwiSaver-managed assets fell a total of $ 665 million from $ 19.1 billion to $ 18.5 billion.
The bank remains the largest provider of KiwiSaver.
At the same time, ANZ, which is included in the ASX list, ANZ announced that its profit for the half year increased by 10 percent to 3.53 billion Australian dollars, while cash income fell by 3 percent to 3.113 billion Australian dollars. The bank announced an interim dividend of 72 cents per share.