Australia's big four banks are back in bloom, with mortgage books flourishing after concerns over net interest margins and a sluggish period for some in the latter half of 2023.
The latest data on Australian authorised deposit-taking institutions (ADIs) released by the Australian Prudential and Regulation Authority (APRA) also revealed Australia’s new sixth largest lender as three contenders battle it out among the second-tier banks.
CBA’s total mortgage book grew by $2.9 billion between April 30 and May 31, representing a 0.54% increase on its $554.8 billion mortgage book.
The major bank’s investment book increased by $1.3 billion while its owner-occupied book increased by $1.6 billion.
This follows a strong start to the year by Australia’s largest lender, increasing its total books by $9.6 billion since the start of the year.
The calendar year’s results have been in stark contrast to CBA’s second half of 2024, where mortgage lending stagnated and even went on an unprecedented three-month decline.
CBA's turnaround comes amidst industry concerns about narrowing net interest margins (NIM) and the cost of using third-party channels.
The bank has recently implemented several strategic changes to its mortgage offerings.
These include:
These efforts come after a decrease in broker-originated loans for CBA, dropping from 48% to 43% in its half-year results. In comparison, Westpac (65%), NAB (65%), and ANZ (61%) continue to rely more heavily on brokers.
Despite the shift, CBA maintains its commitment to the broker channel.
Dr. Michael Baumann (pictured above left), CBA's executive general manager of home buying, reiterated this stance in late May, stating that "as Australia's largest lender with the highest volume of broker-originated loans, we remain committed to this channel."
Among the rest of the big four, Westpac continued its strong growth trajectory climbing 0.62% in the monthly period, bringing its total books up to $472.48 billion. Year-on-year, Australia’s second-largest bank has increased its books by $26.4 billion (5.84%), the most among the major lenders.
Conversely, National Australia Bank (NAB) has struggled to grow its mortgage lending, with it only increasing by $135 million over the month. NAB’s investor books even shrank by $255 million during the period.
Despite their differences in recent lending numbers, the share price of both banks has remained unaffected with stable dividends driving up their respective prices since the start of the year.
Rounding out the big four banks, ANZ also experienced a bump to its books in May, increasing 0.58% from $296.5 billion to $298.22 billion. This continues a trend of growth for the bank over the past year.
However, the bank’s books are set for a major boost after ANZ’s purchase of Suncorp Bank, Australia’s ninth largest bank, was given the green light by the treasurer in late June.
For its part, Suncorp Bank’s total mortgage books, worth $53 billion, have stagnated throughout the year, only growing by $400 million since January.
Macquarie Bank, Australia’s fifth largest “maverick” lender, has continued its strong lending results into May, increasing by 1.11% from $116.8 billion to $118.1 billion over the month.
Despite strong performances in its home loan and business loan portfolios, Macquarie experienced a significant drop in profits in its last full-year results.
While Macquarie’s annual net profit of $3.5 billion was 32% below FY23, the investment bank ended the year on a relatively positive note, with the second half of the year up 49% on the first.
Since these results were published in March, Macquarie Bank’s mortgage books have increased by $2.5 billion.
There’s a three-way battle going on between second-tier banks Bendigo and Adelaide Bank, Bank of Queensland (BoQ), and ING Bank – currently Australia’s sixth, seventh and eighth largest lenders, respectively.
After acquiring ME’s mortgage books in February 2022, Bank of Queensland’s mortgage books have remained relatively stagnant for nearly two years.
From a peak of $60.57 billion in February 2023, investor and owner-occupied lending has drifted down by 2.26% to $59.21 billion in May 2024.
Meanwhile, Bendigo and Adelaide Bank and ING Bank have steadily taken back market share – so much so that Bendigo and Adelaide Bank has taken the mantle this month as Australia’s sixth largest lender.
Bendigo Bank home loan customers are the most satisfied in Australia, according to a recent survey that polled more than 30,000 customers from the ten biggest banks.
The satisfaction of Bendigo Bank customers with their home loans was measured as a market leading 87.7% over the six months to March 2024, according to Roy Morgan- external site, maintaining its significant gap over the average of the major banks.
Chief customer officer for consumer banking at Bendigo Bank, Richard Fennell (pictured above right), said he was honoured but not surprised by the result given the Bank’s approach to banking.
“At Bendigo Bank, we pride ourselves on the relationships we build with our customers,” Fennell said.
“We work hard to deliver great outcomes for each and every customer and have reached out to as many of our home loan customers as possible over the last two years to make sure their loans were suitable for their circumstances.
But while Bendigo and Adelaide’s year-on-year results are impressive - increasing 2.89% from $57.9 billion to $59.6 billion – ING Bank is catching up fast, increasing 6.05% from $55.7 billion to $59.1 billion.
Interestingly, Bankwest (86.6%), ING Bank (84.6%), and Macquarie Bank (79.9%) made up the top four in the survey’s customer satisfaction ratings.
