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Australia's biggest bank has admitted to being "underweight" on its broker-originated home loans and investment lending over the six months to 31 December 2014.
In its half-yearly results, released yesterday, the Commonwealth Bank of Australia recorded a drop in mortgage growth, particularly in the broker channel and investor spaces.
CBA home loans grew at 6.4 per cent over the six months to 31 December 2014, below system growth of 6.8 per cent.
“We lost about 10 basis [points] of market share in that period down to 25.1 per cent,” CBA chief executive Ian Narev explained.
“That is largely because we are underweight in some of the higher growth segments, particularly in broker and investment lending,” he said.
Answering questions about the bank’s risk appetite for investor loans, Mr Narev said the lender is “comfortable”.
“We make sure particularly with servicing ratios but also with our attitude to property values et cetera that we don't seduce ourselves into believing that the economic conditions that the borrowers are borrowing now, often for 15-, 20-, 30-year home loans, are necessarily the ones that are going to exist in a couple of years’ time,” he said.
“With servicing ratios, with our overall attitude towards interest-only lending, with our attitude towards loan to value ratios et cetera, they are all stressed in individual cases to make sure that shocks to interest rates, to people's income et cetera, that most of our borrowers can withstand that.”
The CBA boss added that the bank does not need to make any big changes.
“We just need to keep a very close eye on the market and see if there are any significant changes that are coming there,” he said.
The bank did, however, record strong margins in business lending, credit card lending and other household lending.
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[Related: CBA reduces rates to record-low]
