ANZ’s mortgage book continues thinning

According to the latest monthly banking statistics from the Australian Prudential Regulation Authority (APRA), ANZ’s mortgage book fell by another $500 million in April, from $256.8 billion to $256.3 billion.

The decline was mostly driven by a $400 million fall in its investment portfolio, which slipped from $78.4 billion to $78 billion, while its owner-occupied book dropped $100 million to $178.3 billion.

Over the course of 2019, ANZ has reported a cumulative contraction in its total mortgage book of $2.4 billion, from $258.7 billion as at 31 December 2018.

Following the release of the bank’s half-year 2019 financial results (1H19), CEO Shayne Elliott told Mortgage Business that ANZ’s weakened position in the mortgage market was attributable to a “conscious” decision to revise its home lending strategy.

“It was a conscious decision,” he said. “We don’t believe that all loans are necessarily the right loans to book.”

Mr Elliott went on to state that ANZ’s strategic revision has reflected the “massive shift” in appetite away from borrowers with a higher-risk profile, with the bank reducing its exposure to investment and interest-only loans.

However, Mr Elliott conceded that the bank’s reaction to increased regulatory scrutiny in the lending environment was “clumsy”, adding that ANZ “over-shot” in its policy response.

“Some of [the mortgage contraction] was not deliberate, it was absolutely a mistake on our part, where we implemented some process changes that made it too hard to get a loan with ANZ,” he said.

Mr Elliott noted that the bank was working on improving its processes but added that the bank was “not going back to the old days of saying all market share is the same, and we want to grow as much as we can”.

The APRA data revealed that NAB’s mortgage portfolio also thinned in April, dropping by $100 million, from $261.1 billion to $261 billion.

NAB’s portfolio contraction was driven by a $300 million slip in its investment home loan book, from $105.3 billion to $105 billion, which was offset by $200 million growth in its owner-occupied book ($156 billion).

CBA still leading the pack

Meanwhile, the APRA statistics revealed that the Commonwealth Bank of Australia (CBA) is continuing to outpace its peers.

In April, CBA’s portfolio – which includes loans settled by its subsidiary Bankwest – increased by $1.7 billion, from $429.8 billion to $431.5 billion.

Most of CBA’s portfolio growth was driven by a $1.5 billion rise in its owner-occupied book, which grew to $298.4 billion, while its investment home loan portfolio rose by $200 million to $133.1 billion.

Westpac and its subsidiaries (Bank of Melbourne, BankSA and St George Bank) also reported strong portfolio growth of $1.4 billion in April, with the group’s total book increasing from $414.5 billion to $415.9 billion.

Westpac’s portfolio growth was also largely driven by a rise in its owner-occupied book, which increased by $1.1 billion to $263.3 billion, while its investment home loan book rose by $300 million to $152.6 billion.

Credit growth continues slowing

APRA’s latest banking statistics have coincided with the release of the Reserve Bank of Australia’s (RBA) latest Financial Aggregates data, which reported housing credit growth of 0.3 per cent in April, following on from growth of 0.3 per cent in March.  

In annual terms, however, housing credit growth declined from 6 per cent in the year to April 2018 to 3.9 per cent growth in the year to April 2019.

Personal lending growth remained in negative territory, declining by 0.3 per cent month-on-month and 2.8 per cent in the 12 months to April 2019.

Business lending growth remained stable in April and has grown 4.5 per cent over the year to April, up from 4.1 per cent in the previous corresponding period.  

The RBA reported total credit growth of 0.2 per cent in April and 3.7 per cent in annual terms, down from 5 per cent in the year to April 2018.  

[Related: ANZ suffers $1.9 billion quarterly hit to mortgage book]