National Australia Bank (NAB) has shown some strong growth in its most recent half yearly financial results released yesterday (4 May).
Underlying profit rose by 2.6% from $4.95bn to $5.08bn between March 2016 and March 2017, while cash earnings increased by 2.3% from $3.22bn to $3.29bn in the same time period.
Volumes of loans originated through the broker channel rose from $84.8bn to $92.5bn from March 2016 to March 2017 – an increase of 9% – which included white-label products issued through Advantedge.
The number of brokers under the NAB-owned aggregators of Choice, FAST
and PLAN also increased although at a slower rate. In the six months prior to 31 March 2017, broker numbers in these channels rose by 147 (or 3%) from 4,299 to 4,446.
A full NAB product suite was launched to brokers in September 2016. Additionally, the bank said it was providing an improved on-boarding experience for broker customers.
The Australian market share for housing lending at NAB was 15.6% as of March 2017.
Describing its responsible house lending practices, NAB said it placed a maximum 70% loan to valuation ration (LVR) on certain ‘high risk’ postcodes while using a differentiated pricing structure based on both loan purpose and repayment type.
NAB applies a 7.25% floor interest rate plus a 2.25% serviceability buffer.
For non-residents, the bank had restricted lending to less than 3% of its total housing portfolio while applying a maximum LVR of 60%.
Regarding interest-only lending, NAB expected to meet the 30% limit imposed by the Australian Prudential Regulation Authority
(APRA) within the agreed-to timeframe. However, 41% of all new lending at NAB was interest only in the March 2017 quarter.
Interest only loans with NAB automatically convert to principal and interest with the bank giving a maximum time limit of five years to owner occupiers and 10 years for investors. Loan serviceability for interest-only loans is also assessed on a principal and interest basis, the bank said.
In total, 57.7% of all home loans at NAB were owner occupier with the remaining 42.3% going to investors. This can be broken up further as follows:
- Owner occupier principal and interest (44.9%)
- Owner occupier interest only (12.8%)
- Investor principal and interest (17.0%)
- Investor interest only (25.3%)
Investor and owner-occupier loans both increased by 6% on a year-on-year basis.
Looking at each state, NAB wrote 37% of its mortgages in NSW/ACT, 31% in Victoria, 17% in Queensland, 10% in Western Australia and 5% combined in South Australia and the Northern Territory.
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