However, it's the safest part of its book which is shrinking while riskier mortgages show strong growth.

ASB's June quarter disclosure statement shows its mortgage book shrank by $39 million to $37.39 billion in the three months ended June 30 while total mortgage lending by registered banks rose by $1.69 billion in the quarter – as previously reported, ANZ Bank accounted for $1.09 billion of the quarter's growth, a record for any New Zealand bank.

ASB's mortgage book has shrunk in nine of the last 10 quarters – it showed $67 million growth in the March quarter. Its market share at June 30 stood at 21.8%, down from 22.01% at March 31 and 22.36% at June 30 last year.

ASB's mortgages with loan-to-valuation ratios (LVRs) up to 80% shrank by $507 million in the quarter and by $615 million in the year ended June.

By contrast, mortgages with LVRs above 80% and up to 90% grew by $197 million in the June quarter and by $675 million in the year ended June. Mortgages with LVRs above 90% grew by $271 million in the June quarter, although they shrank by $79 million in the year ended June.

ASB's net profit for the quarter was flat at $153 million with its 8.3% growth in net interest income offset by charges against profit for bad debts rising to $20 million compared with an $8 million credit in the same quarter last year.
For the year ended June 30, net profit rose 20.6% to $685 million.