NAB's investor loan growth falls sharply

NAB has recorded a significant fall in the growth of its investor home loans over July and August in response to regulatory pressure.

Announcing its full-year profit results yesterday, NAB revealed that its annualised monthly growth in investor mortgages had dropped back considerably from 16.3 per cent in June to 3.0 per cent in July, then further to 2.5 per cent in August.

The major bank noted that it is on track to comply with APRA’s 10 per cent growth cap.

Over the 12 months to 30 September this year, NAB noted that its mortgage lending had been impacted by credit policy tightening, investor-lending initiatives and recent interest-only and line-of-credit repricing.

The group said owner-occupier volumes have also been impacted by regulatory pressures, but applications are showing recent improvement.

“Housing lending increased by $30.8 billion or 9.9 per cent on September 2014,” the bank said in a trading update yesterday.

“Excluding foreign exchange, the increase was $23.4 billion or 7.5 per cent mainly due to an increase of $18.3 billion in Australian banking, with strong growth in both the proprietary and broker channels and an increase of $3.8 billion in UK banking, driven by improved growth in new lending, primarily via the broker channels.”

The group’s housing lending margin decreased by three basis points largely due to “competitive market pressure on pricing, partially offset by lower funding costs”, while housing lending income increased by $6 million or 2.3 per cent compared to the September 2014 full-year as a result of “increased volumes, partially offset by competitive market pressures on fees”.

NAB’s non-housing lending increased by $15.8 billion or 7.0 per cent on September 2014.

The group’s business lending margin decreased by 19 basis points as a result of “competitive pressure on customer pricing, changes in lending mix and lower earnings on capital, partially offset by lower funding costs”.

NAB’s business lending income increased by $36 million or 6.6 per cent, mainly as a result of “increased lending volumes, combined with higher fees in capital financing".

“This was partially offset by competitive market pressures on pricing,” the group said.

NAB delivered a $5.84 billion cash profit, up 15.5 per cent.

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