ANZ mortgage book slims

ANZ posted its third quarter update on Wednesday, revealing it had seen a $300 million decrease in its mortgage balance sheet during the three months to 30 June. The total housing loan portfolio sat at around $280 billion.

A $16.2 billion rise in mortgage lending during the quarter had been offset by $16.5 billion in paydowns.

In previous quarters, the bank had recorded markedly smaller paydown rates, with averages of around $15 billion in the December quarter, $14 billion in 2H20 and $13 billion in 1H20.

ANZ noted that there had been an ongoing shift to principal and interest loans, as well as customers accelerating their principal reduction, by increasing their offset balances and paying more than their minimum repayments.

The bank also stated that it had actions underway to address a rise in refinancing out and to improve turnaround times – with counter attacks including adding assessment resources, process simplification and automation.

Looking at deferral support amid the ongoing lockdowns, around 80 per cent of both housing and business loan deferrals had been provided in NSW.

In mortgages, deferrals had been provided on around 1,300 loans, or $600 million worth.

The level of deferrals were equivalent to around 1 per cent of the total provided in the prior 2020-2021 period.

In business lending, deferrals have been provided on around 50 loans (around $17 million). The total business loan portfolio was around $70 billion.

Current deferrals were well below the approximate 24,000 business loans deferred in the prior 2020-2021 period.

The day before, Westpac also released its third quarter trading update, revealing a drop in mortgage delinquencies.

The big four bank signalled that it was considering a return of capital to shareholders, with an update expected at its full-year results. Westpac may follow big four rivals ANZ and CBA in launching a share buyback.

ANZ reported its $1.5 billion buyback, which commenced on 4 August, is expected to reduce its common equity tier 1 (CET1) capital by around 35 basis points.

Recent Roy Morgan analysis estimated that NAB’s $1.2 billion acquisition of Citi’s local consumer business will grow its customer base beyond that of ANZ – with both banks currently serving around 9 million customers.

[Related: Lockdowns temper home buying plans: CBA]