CBA loan book continues to shrink

Major banking group Commonwealth Bank of Australia (CBA) has revealed its home lending volume fell $4.5 billion in the first quarter of the 2024 financial year (1Q24), compared to the previous quarter, 4Q23.

Australia’s largest mortgage lender saw home loan volumes drop over the three months to 30 September 2023.

The group said the decline in the September quarter was “a consequence of [its] focus on increasing [its] share of Australian home loan revenue”.

It stated that the decline of its balances “reflects a disciplined approach to pricing, which ensures marginal shareholder returns remain above the cost of capital in a highly competitive market”.

The falling loan book balance figures reflected the Australian Prudential Regulation Authority’s (APRA) statistics, which found that CBA’s mortgage portfolio has been falling in recent months.

It fell by $1.9 billion in July, $1.4 billion in August and $794 million in September 2023, according to the monthly authorised deposit-taking institution (ADI) statistics released by APRA.

In September, CBA maintained its top spot in mortgage market share despite its owner-occupier loan book falling by $836 million, taking its balances to $362 billion.

When comparing the group’s Australian mortgage book to the September quarter of the previous year, it achieved 3.1 per cent growth.

The group’s business lending also rose 11.2 per cent over the year (or by $2.2 billion in the quarter), with its continued focus on growing its business banking franchise that saw business transaction accounts increase by approximately 36,000 in the quarter – to nearly 1.2 million accounts – up 10 per cent on the prior comparative period.

In its quarterly results, the group, which includes CBA and Bankwest, confirmed that it had shifted its focus for its home loans from the broker channel to direct.

It stated: “We have focused on proprietary distribution with new proprietary home loan fundings in the quarter broadly flat on the prior comparative period at $18 billion, while lower margin new broker fundings declined [by around] $5 billion over the same period.”

The group’s proprietary focus followed its chief executive Matt Comyn’s comments in July that brokers remained a “really important part of support” for customers, predominantly for its Bankwest brand.

At the time he commented: “We have the largest proprietary bank and employ lenders who have direct relationships with our customers, but still, mortgage brokers are a really important part of support [for our] customer base in Bankwest.”

The major lender’s 1Q24 results also showed an increase in its home loan arrears, up 2 bps to 0.49 per cent, which returned it to June 2022 levels.

Mr Comyn stated: “We are very conscious that many Australians are feeling under pressure in the current environment.

“While some remain well-positioned, we recognise that others are finding the higher cost of living very tough. Our customers are continuing to take practical steps to navigate through a period of tighter household finances and we are here to help them.

“As a result, we have seen a modest increase in consumer arrears over recent months. Our balance sheet strength means we are well-positioned to support those customers who need it.

“Strong banks benefit all Australians, and we remain well-positioned to continue to support our customers, invest in our communities and provide strength and stability for the broader Australian economy.”

The latest results also revealed an unaudited statutory profit of $2.5 billion in the quarter, up 1 per cent on the prior comparative period.

[Related: APRA stats reveal another drop in CBA mortgage book]