CBA reveals $8bn mortgage reclassification

by Miklos Bolza04 Oct 2017
Big four lender Commonwealth Bank of Australia (CBA) has revealed new information on its reclassification of household lending, with $7.9bn of loans being switched from owner-occupied and investment to ‘other’ – a category normally used for personal lending.

In an ASX announcement released on Friday (29 September), CBA reported the following loan book changes between October 2015 and July 2017:
  • Owner-occupied mortgages dropped from $278.4bn to $273.9bn
  • Investor mortgages dropped from $138.2bn to $134.8bn
  • Other residential loans increased from $10.1bn to $18.0bn
These figures were correct as of 31 July 2017.

“The reclassification is for statistical reporting purposes only and has no impact on customers, the security and serviceability arrangements for these loans or on CBA’s regulatory capital, risk appetite, risk-weighted assets or statutory financial statements,” the bank wrote.

“The reclassification has minimal impact on CBA’s reported volumes relative to APRA’s industry benchmark for investor mortgage growth and limit for new interest-only mortgage lending.”

This switching reflected loans that were initially made under home loan products and then later expanded to include a car, boat or some other asset that fell into the personal loans category, a bank spokesperson told the Australian Financial Review.

CBA is required to change the purpose of the loan from ‘housing’ to ‘other’ if the majority of the loan balance shifts from the property itself to some other asset, they said. This reclassification accounts for less than 2% of the bank’s total residential loan book.

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