5 NZX financial stocks to explore amid DSR discussion

Highlights 

• The RBNZ is seeking feedback on merits and design of two types of debt serviceability restrictions.
• ANZ has paused its low-deposit lending for homebuyers amid tighter lending curbs by the RBNZ.
• Westpac has also stopped accepting applications for low-deposit loans from its own customers.

 

The RBNZ announced on Tuesday that it was looking for advice on advantages and design attributes of debt serviceability restrictions (DSR) on residential mortgage lending.

Deputy Governor Geoff Bascand stated that the central bank was preparing to implement DSRs if financial stability risks permit. The RBNZ is seeking inputs on benefits and layout of two types of DSRs: debt-to-income (DTI) ratio limitations and a cap on the trial interest rates used by banks in serviceability evaluations.

Amid this backdrop, let’s walk you through the performance of these 5 NZX financial stocks.

Image source: © 2021 Kalkine Media, Data source- EODHD/Others

Australia and New Zealand Banking Group Limited (NZX:ANZ; ASX:ANZ)

ANZ has suspended its low-deposit loan applications for homebuyers temporarily on Tuesday to comply with RBNZ curbs on limiting lending to borrowers with less than 20% deposits.

A lending halt is expected to affect nearly 10% of the customers, while existing authorisations and pre-authorisations would be unaltered.

ANZ ended the day 1.72% in green to close at $28.33.

Westpac Banking Corporation (NZX:WBC; ASX:WBC)

Westpac has also stopped accepting applications for low-deposit loans from their own customers.

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On 18 November, the bank notified that it would issue Tier 2 subordinated notes on Tuesday. The issue of notes is likely to bring up Tier 2 regulatory capital. This would fulfil WBC’s regulatory needs and preserve the multiplicity of the bank’s sources and kinds of capital funding.

WBC ended the day 0.67% in green to close at $22.65.

Heartland Group Holdings Limited (NZX:HGH; ASX:HGH)

On 1 November, Heartland issued a notice on performance rights to certain employees of HGH on 1 November under its performance rights plan for FY22.

The Group is expecting a profit in the range of $93 million-$96 million in the new year.

HGH ended the day 0.44% in green to close at $2.28.

Tower Limited (NZX:TWR)

Tower notified the market this month that it was on track to take the ownership of National Pacific Insurance Limited (NPI). The Company purchased an extra 22% interest in NPI from its second-biggest shareholder for $3.4 million in October, taking its total shareholding to over 93%.

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The Group stated that owning 100% of NPI will enable the Company to restructure its NZ and Pacific operations.

TWR ended the day flat at $0.645.

Barramundi Limited (NZX:BRM)

Barramundi announced a quarterly dividend of 1.81cps on Monday and will be paid on 17 December 2021. The Group’s net asset value stood at $0.8661 as on 17 November 2021 with CSL, Wistech, Carsales.com, CBA and Seek accounting for the five biggest portfolio holdings.

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BRM ended the day flat at $0.99.

Bottom Line

The RBNZ has been considering DTIs to restrict risky lending and is seeking feedback on DSRs from interested parties till 28 February 2022.

(NOTE: Currency is reported in NZ Dollar unless stated otherwise)