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The big four banks all grew their owner-occupied lending portfolio in March, with two majors increasing their investor loan book, too, new data from APRA has revealed.
The Commonwealth Bank (CBA), Westpac, ANZ and National Australia Bank (NAB) expanded their owner-occupied loan books over the month of March, according to data from the Australian Prudential Regulation Authority’s (APRA) Monthly Banking Statistics.
CBA’s owner-occupied book recorded the largest growth, rising from $282.9 billion in February to $283.9 billion in March, followed by Westpac ($249.9 billion to $251.4 billion), ANZ ($174.9 billion to $175.7 billion) and NAB ($148.2 billion to $149.0 billion).
Further, despite APRA chairman Wayne Byres stating last week that investor growth had moderated (and APRA announcing the removal of its 10 per cent benchmark), Westpac and NAB both reported growth in investor lending, with the banks expanding their portfolios by approximately $300 million and $200 million, respectively.
Westpac’s investor loan book was also the largest of the big four, increasing from $151.8 billion in February to $152.5 billion in March, while NAB’s portfolio increased from $104.9 billion to $105.1 billion.
Conversely, ANZ, which has the smallest investor loan book, experienced the largest decline, falling by $300 million, from $82.6 billion to $82.3 billion, while CBA’s portfolio dropped by $100 million, slipping from $132.9 billion to $132.8 billion.
APRA removes investor benchmark
Last week, the prudential regulator announced plans to remove the investor loan growth benchmark and replace it with “more permanent measures to strengthen lending standards”.
It revealed that it will remove its 10 per cent benchmark on investor loan growth, which it has said was always a temporary measure.
The curb was introduced in 2014 as part of a range of actions to reduce higher-risk lending and improve practices.
“In recent years, authorised deposit-taking institutions (ADIs) have taken steps to improve the quality of lending, raise standards and increase capital resilience,” the regulator said.
“APRA has written to ADIs... to advise that it is now prepared to remove the investor growth benchmark, where the board of an ADI is able to provide assurance on the strength of their lending standards.”
For the 10 per cent benchmark to no longer apply, Australian banks will be expected to confirm that:
- lending has been below the investor loan growth benchmark for at least the past six months;
- lending policies meet APRA’s guidance on serviceability; and
- lending practices will be strengthened where necessary.
For those banks that do not meet the required commitments, the benchmark will continue to apply.
[Related: Opinion: APRA’s actions will reduce borrowing power]
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