Three of the big four banks have reported contractions in their mortgage books over the September quarter, according to the latest APRA data.
The Australian Prudential Regulation Authority (APRA) has released its latest issue of the Monthly Authorised Deposit-Taking Institutions (MADIS) statistics, which have revealed that the Commonwealth Bank of Australia (CBA) was the only major bank to strengthen its mortgage book over the three months to 30 September.
CBA’s home loan portfolio increased by approximately $3.9 billion over the quarter, rising from $434.5 billion as at 30 June to $438.4 billion.
The bank’s growth came exclusively via the owner-occupied channel, with its owner-occupied book growing by approximately $4.1 billion, from $278.7 billion to $282.8 billion.
This was offset by a decline in CBA’s investment home loan portfolio, which decreased from $155.8 billion to $155.6 billion.
Meanwhile, ANZ, NAB and Westpac each reported contractions in their portfolio over the September quarter.
Despite growing its mortgage book in August (the first monthly increase in 2019), ANZ’s total portfolio slipped by approximately $1.7 billion, from $248 billion to $246.3 billion.
The contraction came via its investment portfolio, which dropped by approximately $1.8 billion, from $88.4 billion to $86.6 billion.
This was slightly offset by growth in its owner-occupied book, which increased from $159.6 billion to $159.7 billion.
This follows the release of ANZ’s full-year results for the 2019 financial year (FY19), in which it reported a $17 billion (30 per cent) drop in home loan settlements, from $57 billion in FY18 to $40 billion in FY19.
However, ANZ’s chief financial officer, Michelle Jablko, told investors that the bank has observed a pick-up in volumes over the second half, which she attributed to processing improvements and ANZ’s work to rebuild the trust of its distribution networks.
“In the second half of the year, we’ve significantly improved our home loan assessment times with better clarity and consistency on policy and risk settings for the frontline,” she said.
“This has seen the overall rate of decline in the portfolio progressively slow over the course of the second half.
“We also ran a major marketing campaign to attract more customers and restore confidence across our distribution channels.”
Ms Jablko continued: “As a result, application volumes increased, with average levels in the second half more than 30 per cent higher than the first.”
The CFO added that ANZ’s “improved momentum” has continued over the first quarter of FY20, but said it may take some time before home lending growth is reflected in the bank’s balance sheet.
“This improved momentum takes time to flow through to the balance sheet and needs to be balanced against higher amortisation, with 82 per cent of customers paying principal and interest and many customers now getting ahead of their repayments given lower interest rates,” she said.
The APRA data revealed that NAB’s portfolio also contracted over the September quarter, down by approximately $800 million, from $261.9 billion to $261.1 billion.
Growth in NAB’s owner-occupied portfolio was offset by a sharp contraction in its investment portfolio.
The bank’s owner-occupied book increased by $1.7 billion, from $146.8 billion to $148.5 billion, while its investment portfolio contracted by $2.5 billion, from $115.1 billion to $112.6 billion.
Westpac reported the sharpest contraction in its mortgage portfolio over the September quarter, with its loan book contracting by approximately $1.8 billion, from $413 billion to $411.2 billion.
The contraction came exclusively through its investment book, with its owner-occupied book increasing from $226.7 billion to $227.2 billion.
Westpac’s investment portfolio decreased by approximately $2.4 billion, from $186.3 billion to $184 billion.
The release of the APRA data coincided with the publication of the Reserve Bank of Australia’s (RBA) Financial Aggregates data, which reported housing credit growth of 0.2 per cent in September, in line with the previous month.
However, housing credit growth was down year-on-year, from 5.2 per cent in the year to September 2018 to 3.1 per cent in the year to September 2019.
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