ANZ loan book continues to fall

The Australian Prudential Regulation Authority (APRA) has released its monthly authorised deposit-taking institution statistics for August 2021, which has revealed that ANZ’s total loan portfolio fell from $261.8 billion in July 2021 to just under $261.0 billion in August 2021.

This decline was driven by a drop in owner-occupier lending, which fell from $174.6 billion in July to $173.9 billion in August.

Investor lending decreased marginally from $87.2 billion in July to $87.1 billion in August.

The figures have pointed to continued trends of a slimmer loan book at ANZ, with July APRA figures revealing that ANZ was the only major bank to see declines in both its owner-occupier and investor portfolios.

In a recent interview published on the bank’s publication bluenotes, ANZ group executive Australia retail and commercial Mark Hand responded to questions about the APRA statistics on whether the big four bank had found the home loan market tougher than its major rivals.

He commented: “That’s a fair assessment of the last few months.”

However, he noted the bank had not expected a “huge, sustained rise” in application volumes this year, particularly in the refinance market.

“This means we are now handling double the applications we were two years ago and unfortunately assessment times moved out to a level we weren’t happy with,” he said.

Mr Hand said that ANZ has a team of staff dedicated to reducing assessment times, which has cut down to seven days for applications received from brokers. However, loans submitted through the direct channel have maintained shorter time frames, he said.

“The next critical step we are working on is automation of manual steps and processes and that is going well and will set us up for future volume fluctuations,” Mr Hand said.

Nonetheless, ANZ chief executive Shayne Elliott recently said that banks should be conducting more rigorous checks on loan applications, even if it increases approval times.

Stressing that now is not the time to be loosening risk standards, Mr Elliott said: “It’s actually the time to be doing the reverse and actually be tightening. It is a time to be asking more questions. It is a time to be doing more analysis on borrower capacity. It is a time to be really understanding a borrower’s expense profile and their income outlooks.”

His comments have come even as speculation swirls around the introduction of new macroprudential controls and what levers regulators may pull to curtail the red-hot property market.

According to APRA data, ANZ’s total residents’ loans and finance leases were at $407.4 billion in August, down from $408.0 billion in July.

Across the other major banks, the Commonwealth Bank of Australia (CBA) recorded the largest increase in its loan book, up from $486.3 billion in July to almost $490.0 billion in August.

This was driven by a jump in its owner-occupier portfolio, which increased from $322.3 billion in July to $324.8 billion in August.

The lender’s investor portfolio increased marginally from $164.0 billion in July to $164.9 billion in August.

CBA’s total residents’ loans and finance leases rose from $686.9 billion in July to $690.5 billion in August.

Westpac recorded the largest increase in its owner-occupier portfolio out of the big four banks, which increased from $244.8 billion to $247.9 billion in August.

This led to its overall loan book increasing from $420.2 billion in July to $422.3 billion in August.

However, it was the only other major bank (other than ANZ) to record a decrease in investor lending, which declined from $175.4 billion in July to $174.4 billion in August.

Total residents’ loans and finance leases increased from $602.3 billion in July to $604.2 billion in August, APRA figures revealed.

National Australia Bank’s total loan book increased from $269.2 billion to $270.8 billion in August, driven by an increase in both investor lending (from just under $100.0 billion in July to $100.0 billion in August) and owner-occupier lending (which rose from $169.2 billion in July to $170.8 billion in August).

Total residents’ loans and finance leases increased from $491.3 billion to $493.7 billion in August.

APRA figures have revealed that overall, total residents’ loans and finance leases increased by $11.7 billion or 0.4 per cent in August.

This was led by a 0.7 per cent – or $9.1 billion – increase in owner-occupier housing, while investor housing increased by a more subdued $1.1 billion, or 0.2 per cent (continuing recent trends of an upward trend in investor lending).

Commenting on the trends, APRA said: “The sustained growth in housing lending continues to reflect strong borrower demand bolstered by low mortgage interest rates.”

Non-financial business lending increased by 0.7 per cent – or $5.8 billion – in August, partly reflecting slight improvements in business conditions and confidence, APRA said.

Other household lending (including fixed-term personal loans) decreased for the 10th consecutive month, declining by $300 million, or 0.4 per cent.

Editor's note: The loan book values were previously quoted in "millions", which was incorrect. This has now been changed to "billion".

[Related: Lender economists ‘surprised’ by lending changes rumours]