Investor lending plunges by $3bn

by Miklos Bolza03 Oct 2017
Overall levels of lending at Australian banks have dipped due to significant decreases in the volume of investment loans, according to the latest figures from the Australian Prudential Regulation Authority (APRA).

APRA’s Monthly Banking Statistics released on Friday (29 September) show $1.57trn on the total loan books of banks during the month of August. This was a slight decrease of 0.1% from $1.58trn the month before.

The drop was due to a decrease in investment lending between the two months with total investment loan books at the banks dropping by $3bn (or 0.5%) from $553bn to $550bn. In contrast, owner occupier lending rose slightly by $1.3bn (or 0.1%) from $1.022trn to $1.024trn in the same time period.

However, the Reserve Bank of Australia’s (RBA’s) monthly financial aggregates, also released on Friday (29 September), show that overall lending volumes continue to increase with total housing credit growing by 0.5% from July to August and by 6.6% year-on-year.

The reason there's a difference between APRA and RBA data is because APRA does not readjust for re-classified loans and because the non-bank sector is picking up some of the slack, said Martin North, principal of Digital Finance Analytics (DFA).

The RBA estimates that $58bn worth of loans was switched from investor to owner-occupier between July 2015 and August 2017. Of this, $1.7bn was moved in August 2017 alone.

Looking at APRA’s data, the big four banks held $1.30bn in August. This was 82.5% of the total market share, a slight decrease from the 82.6% recorded in July.

The owner occupier loan books of the big four sat at $830bn in August (81.0% of total market share) while investment lending sat at $472bn (85.4% of total market share).

APRA’s figures for the four major banks and the largest non-major banks are as follows:
  Owner occupier (August) Owner occupier (July) Owner occupier change Investor (August) Investor (July) Investor change
ANZ $167.3bn $166.1bn +$1.2bn $82.5bn $82.7bn -$0.2bn
CBA $275.6bn $278.4bn -$2.8bn $134.3bn $138.2bn -$3.9bn
NAB $143.1bn $142.1bn +1.0bn $104.0bn $103.6bn +$0.4bn
Westpac $243.7bn $242.1bn +$1.6bn $148.5bn $147.6bn +$0.9bn
AMP $9.7bn $9.5bn +$0.2bn $2.8bn $2.9bn -$0.1bn
BOQ $16.2bn $16.2bn Nil $11.1bn $11.1bn Nil
Bendigo/Adelaide $22.4bn $22.9bn -$0.5bn $11.7bn $11.8bn -$0.1bn
ING $33.2bn $32.9bn +$0.3bn $9.6bn $9.6bn Nil
Macquarie $18.4bn $18.9bn -$0.5bn $8.3bn $8.6bn -$0.3bn
ME $12.9bn $12.6bn +$0.3bn $5.3bn $5.3bn Nil
Suncorp $29.4bn $29.1bn +$0.3bn $12.1bn $12.0bn -$0.1bn

Out of the four major banks, CBA suffered the largest drops in its loan book by far, losing $2.8bn from owner-occupiers and $3.9bn from investors.

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