Major banks’ investor lending slides: APRA

The Australian Prudential Regulation Authority’s Monthly Authorised Deposit-taking Institution Statistics (MADIS) for July 2021 has revealed that total residents’ loans and financial leases increased by $14.6 billion or 0.5 per cent in July.

This was driven by an $8.5 billion – or 0.7 per cent – rise in owner-occupied lending (but growth levels reduced compared to June, when owner-occupier lending grew by $13.2 billion).

However, investor housing lending growth weakened considerably in July, increasing by only 0.02 per cent – or $100 million – compared to the $2.6 billion (0.4 per cent) growth in June 2021.

Commenting on the lending trends, APRA said: “The sustained growth in housing lending continues to reflect strong borrower demand bolstered by low mortgage interest rates, and government measures supporting first home buyers and new home building.”

Investor lending dips across big four

Weaker growth in investor lending was reflected in the loan books of three of the four major banks, which recorded declines in July 2021.

Westpac’s investor housing loan book decreased from $176.6 billion in June to $175.4 billion in July, while National Australia Bank’s (NAB) investor loan book declined from $100.1 billion in June to under $100.0 billion in July.

ANZ recorded a modest reduction in its investor loan book, down from $87.4 billion in June to $87.2 billion in July.

ANZ was also the only major bank to record a fall in its owner-occupied portfolio, down from $175.3 billion in June to $174.6 billion in July.

The major bank’s overall loan portfolio reduced from $262.8 billion in June to $261.8 billion in July.

ANZ recently reported that its home loan balance slimmed by $300 million in the June quarter in its third-quarter update despite a rise in mortgage lending (which had been offset by paydowns).

On the other hand, the Commonwealth Bank of Australia (CBA) was the only major bank to record an increase in investor lending, with its portfolio rising from $163.2 billion in June to over $164.0 billion in July.

The bank’s owner-occupied loan book rose from $320.3 billion in June to $322.3 billion in July, while its total loan book increased from $483.6 billion in June to $486.3 billion in July.

NAB’s total loan book increased from $267.8 billion in June to $269.2 billion in July, driven by its owner-occupied portfolio, which grew from $167.6 billion in June to $169.2 billion in July.

Similarly, Westpac’s loan book grew from $418.0 billion in June to $420.2 billion in July propelled by owner-occupied lending, which rose from $241.4 billion in June to $244.8 billion in July.

Westpac’s total residents’ loans and financial leases increased from $599.3 billion in June to $602.3 billion in July, while they increased from $487.5 billion to $491.3 billion for NAB, and from $683.2 billion in June to $686.9 billion in July for CBA.

ANZ’s total resident loans and financial leases remained stable, decreasing slightly from $408.7 billion in June to $408.0 billion in July.

Non-financial business lending expanded by 0.5 per cent or $4.1 billion in July.

But APRA has warned that forward outlook is uncertain amid extended lockdowns and deteriorating business confidence in impacted regions. 

Loans to financial institutions and general government continued to increase in July, by $4.6 billion or 3.8 per cent, and $300 million or 1.5 per cent respectively.

Credit card lending plunged by 6.3 per cent – or $1.9 billion in July, which APRA attributed to longer-term structural decline in this form of lending as well as the impact of COVID-19-related lockdowns on consumption as consumer sentiment fell in July.

Other household lending (for example, fixed-term personal loans) decreased for the 10th consecutive month, by 1.3 per cent or $1.0 billion.

The Reserve Bank of Australia has simultaneously released its financial aggregates data for July, which showed that housing credit recorded a 0.6 per cent month-on-month increase, down slightly from the 0.7 per cent growth in June 2021.

Housing credit grew by 5.8 per cent for the year ended July 2021, up from 3.2 per cent for the year ended July 2020.

Business credit grew by 1.1 per cent in July 2021, down from the 1.6 per cent growth recorded in June, while it grew by 2.4 per cent for the year ended July, down from 3.5 per cent in July 2020.

Personal credit was down across the board, declining by 1.0 per cent in July 2021 (a deterioration from the 0.7 per cent month-on-month decline in June 2021).

For the year ended July 2021, personal credit was down by 5.9 per cent, an improvement from the 12.9 per cent slump recorded in July 2020.

[Related: Owner-occupied lending surges by $13bn: APRA]