Owner-occupiers push ANZ into positive territory

The Australian Prudential Regulation Authority (APRA) has released the latest issue of its Monthly Authorised Deposit-taking Institutions Statistics (MADIS), revealing that ANZ’s mortgage portfolio entered positive territory for the first time in 2019.  

The improvement was solely driven by a sharp increase in ANZ’s owner-occupied book, which grew by approximately $1.1 billion, from $158.3 billion in July to $159.4 billion in August.

Growth in ANZ’s owner-occupied book was offset by a decline of approximately $600 million in the bank’s investment portfolio, which fell from $87.7 billion to $87.1 billion.

As at 31 August, ANZ’s mortgage portfolio totalled $246.5 billion, up from $246 billion.

The improvement in ANZ’s mortgage portfolio marks the first monthly increase in the 2019 calendar year.

Over the three months to July, ANZ’s total mortgage portfolio slipped $3 billion from $249 billion as at 30 April.  

ANZ CEO Shayne Elliott previously attributed the contraction in the bank’s mortgage book to a “conscious” decision to revise its home lending strategy.

Speaking at Aussie Home Loans’ 2019 Imagine conference in Sydney, Mr Elliott lamented the current state of affairs in the home lending space.

Mr Elliott said that scrutiny placed on lenders off the back of the banking royal commission has produced a risk-averse culture that errs on the side of caution, in fear of repercussion for supposed breaches of responsible lending guidance.  

The CEO called for greater clarity regarding what he described as “grey” and ambiguous guidance, which calls on credit providers to take reasonable steps to ensure a loan is “not unsuitable”.

Mr Elliott said that until such clarity is provided, the bank would avoid processing complex loan applications, which may put the bank at risk under existing arrangements.

The ANZ CEO had also conceded that the bank’s reaction to increased regulatory scrutiny in the lending environment was “clumsy”, adding that ANZ “overshot” in its policy response.

CBA

The APRA data revealed that the Commonwealth Bank of Australia (including its subsidiary Bankwest) also recorded portfolio growth in August, with its mortgage book rising by approximately $1.3 billion, from $435.8 billion to $437.1 billion.

CBA’s portfolio growth was mostly driven by a rise in its owner-occupied book of approximately $1.2 billion, from $280.4 billion to $281.6 billion.

The major bank’s investment portfolio also increased, rising by approximately $100 million, from $155.4 billion to $155.5 billion.

However, according to the APRA data, both Westpac and NAB recorded mortgage book contractions in August.

Westpac

Westpac Group (which includes its subsidiaries Bank of Melbourne, BankSA and St.George Bank) has recorded a contraction in its mortgage portfolio of approximately $700 million, down from $412.7 billion to $412 billion.

The contraction in Westpac’s portfolio was driven by a decline of approximately $800 million in its investor portfolio, which fell from $185.6 billion to $184.8 billion.

This was offset slightly by an increase of approximately $100 million in Westpac’s owner-occupied book, which rose from $227.1 billion to $227.2 billion.

NAB

NAB’s mortgage portfolio also contracted in August, albeit less pronounced than Westpac, with its total portfolio dropping by approximately $100 million from $261.5 billion to $261.4 billion.

The major bank’s owner-occupied book increased by approximately $700 million, from $147.2 billion to $147.9 billion.

However, NAB’s investment portfolio decreased by approximately $800 million, from $114.3 billion to $113.5 billion.

[Related: Treasurer calls for ‘common sense’ in lending space]