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The major banks have reported mixed results in the home lending space, with one lender slipping deeper into negative territory.
According to the latest monthly banking statistics from the Australian Prudential Regulation Authority (APRA), the home lending fortunes of the big four have continued to diverge, with contractions in ANZ and NAB’s portfolios coinciding with sharp increases in the Commonwealth Bank of Australia (CBA) and Westpac’s mortgage books.
No reprieve for ANZ
ANZ’s portfolio has slipped deeper into negative territory, declining by approximately $800 million in the month ending 31 May 2019, from $256.3 billion to $255.5 billion.
The May decline was mostly driven by a drop in its investment portfolio, down $600 million to $77.4 billion, while its owner-occupied book declined by $200 million to $178.1 billion.
For the first five months of 2019, ANZ has reported a cumulative contraction in its home loan portfolio of approximately $3.2 billion, down from $258.7 billion as at 31 December 2018.
Following the release of the bank’s half-year 2019 financial results (1H19), CEO Shayne Elliott told Mortgage Business that ANZ’s weakened position in the mortgage market was attributable to a “conscious” decision to revise its home lending strategy.
Mr Elliott went on to state that ANZ’s new strategy has reflected the “massive shift” in appetite away from borrowers with a higher-risk profile, with the bank reducing its exposure to investment and interest-only loans.
However, Mr Elliott conceded that the bank’s reaction to increased regulatory scrutiny in the lending environment was “clumsy”, adding that ANZ “over-shot” in its policy response.
Mr Elliott noted that the bank was working on improving its processes but added that ANZ was “not going back to the old days of saying all market share is the same, and we want to grow as much as we can”.
ANZ also partly attributed its decision not to pass on the full 25bps cut from the Reserve Bank of Australia (RBA) to its “business performance” and “market conditions”.
NAB joins ANZ in negative territory
NAB has also reported a contraction in its mortgage portfolio, which slipped by approximately $500 million in May, down from $261 billion in April to $260.5 billion.
Like ANZ, NAB’s contraction was mostly driven by weakness in its investment portfolio, which slipped by $400 million to $104.6 billion, while its owner-occupied book fell $100 million to $155.9 billion.
The contraction in May signalled a net reduction of $100 million in the bank’s portfolio over the first five months of 2019, down from $260.6 billion as at 31 December 2018.
Multibillion-dollar boost for CBA
The Commonwealth Bank and its subsidiary Bankwest have both continued to report strong portfolio growth, with a further increase of $1.9 billion in the month ending 31 May 2019, up from $431.5 billion in April to $433.4 billion.
Most of CBA’s portfolio growth came via the owner-occupied market, with its book increasing by $1.6 billion to approximately $300 billion.
CBA’s investment portfolio also increased, up $300 million, from $133.1 billion in April to $133.4 billion as at 31 May.
In total, the Commonwealth Bank’s mortgage book has increased by $6.4 billion over the first five months of 2019, up from $427 billion as at 31 December 2018.
Westpac marches on
Westpac and its subsidiaries (Bank of Melbourne, BankSA and St George Bank), also enjoyed a mortgage portfolio spike over the month ending 31 May 2019, with the group’s total home loan book increasing by $1.6 billion, from $415.9 billion to $417.5 billion.
As with CBA, Westpac’s growth was mostly driven by an increase in its owner-occupied book, which jumped to $264.5 billion, up $1.2 billion from $263.3 billion in April.
Westpac also recorded the sharpest investment portfolio increase over the month of May, up $400 million, from $152.6 billion to $153 billion.
Over the five months of 2019, ending 31 May, the group’s total mortgage book increased by $4.4 billion, up from $413.1 billion as at 31 December 2018.
Credit growth down year-on-year
The release of APRA’s banking statistics coincided with the publication of the RBA’s latest Financial Aggregates data, which reported housing credit growth of 0.2 per cent in the month ending 31 May 2019, down from 0.3 per cent in the same month last year.
In annual terms, housing credit grew 3.7 per cent in the year ending 31 May 2019, down from 5.8 per cent in the previous corresponding period.
The RBA data also revealed that personal loan volumes declined in May, down 0.6 per cent in monthly terms, and 3.2 per cent in annual terms.
However, the RBA recorded an improvement in business credit growth, which increased 0.1 per cent in May, an improvement on stable growth in the same month last year.
In annual terms, business credit grew 4.5 per cent, up from 3.9 per cent in the previous corresponding period.
In total, credit growth remained stable on a monthly basis at 0.2 per cent, but declined in annual terms, down from growth of 4.8 per cent in the year ending 31 May 2018 to 3.6 per cent in the 12 months ending 31 May 2019.
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