Banks report lending growth amid rate hikes

The Australian Prudential Regulation Authority (APRA) has released its monthly authorised deposit-taking institution (ADI) statistics for August 2022, showing that total residents loans and finance leases increased by $20.3 billion (or 0.6 per cent) in August to $3.24 trillion in the month of August.

APRA said this increase was largely “driven by a $7.8 billion increase in loans to non-financial businesses in August”.

This suggests that business credit has remained despite tightening monetary policy conditions and has followed last month’s trend that saw business loans outpace mortgages. 

In addition, owner-occupied lending increased by $6.9 billion (or 0.5 per cent), up more than $2 billion the month earlier, and investor lending rose by $2.2 billion (or 0.3 per cent) in August — also a significant jump on the previous month.

The July data comes ahead of two additional rate rises by the Reserve Bank of Australia (September’s 50 bps and October’s 25bps), which have brought the cash rate to 2.6 per cent.

As monetary conditions tighten, there are expectations lending will ease.

On the back of rate rise, the APRA data revealed households are pulling back on lending such as fixed-term personal loans, which decreased by $0.4 billion. However, credit card lending increased by $0.2 billion (or 0.6 per cent).

For the year ended August 2022, owner-occupied lending rose by $99.2 billion (or 7.9 per cent) whilst investment lending increased by $36.3 billion (or 5.7 per cent), largely unchanged from July.

The data showed mortgage lending, for both owner-occupied and investment, rose by $9.1 billion in August.

The big four banks all reported month-on-month increases with the Commonwealth Bank of Australia (CBA) continuing to lead the pack in total market share. CBA’s total home loan book came in at $522 billion, of which owner-occupier lending accounted for $348 billion.

Westpac’s home loan book totalled $436 billion, with $282 billion coming from owner-occupied lending, followed by National Australia Bank (NAB) at just over $302 billion (of which $194 billion came from owner-occupier lending).

ANZ’s total mortgage book was $263 billion, of which owner-occupied lending made up $173 billion.

[Related: Business lending outpaces mortgages at the banks]