Non-major calls for more regulatory action

by Julia Corderoy21 Mar 2016
Non-major lender ME Bank has reported a rise in its home loan portfolio, but says there is still a long way to go to level the playing field for Australia’s non-major banks. 

According to ME’s half-year results, its home loan portfolio grew by 3.7% from $17.8 billion at 30 June 2015 to $18.4 billion at 31 December 2015. On an annualised basis, that growth is in line with the current system growth.

“We expect home loan settlements to be in line with current system growth through to the end of the financial year,” ME general manager broker, Lino Pelaccia told Australian Broker.

According to Pelaccia, AFG’s competition index reveals ME increased its market share from 1.4% to 2.5% of all broker-originated mortgages over the past quarter.

Whilst this is a strong result, the industry super fund-owned bank is calling for more regulatory changes to further level the playing field between the regional and major banks, including the amount of capital held by the advanced model banks.

“APRA’s directives have gone some way to levelling the playing field, however, there is further to go and additional regulatory changes in 2016 are likely to further level the playing field between ME and the major banks,” Pelaccia told Australian Broker.

“A key change that is looking increasingly likely is a further increase to the amount of capital APRA will require the major banks to hold to ensure they are deemed ‘unquestionably strong’, as recommended by the Financial System Inquiry. 

“A bank analyst recently projected that as much as $32 billion in additional capital is likely to be needed by the major banks. 

“This would provide a greater ability for ME to compete on an equal basis.”

ME reported an after-tax underlying net profit of $30.2 million for the six months ended 31 December 2015, a rise of 8% on the previous corresponding period.