ANZ plans to lend more

Bank to open purse strings amid loan slowdown

ANZ has pledged to lend more to investors as it reported the lowest annualised growth rate in mortgage lending in more than two years due to “overly conservative” settings.

Credit controls have been tightened across Australia’s banking industry in the wake of a public inquiry that found, among other things, that banks had flouted responsible lending laws to the detriment of their customers.

ANZ said in a limited update that its home-loan volumes shrank in the first fiscal quarter, citing its own cautious approach as well as weak demand for credit at a time of falling house prices.

“We acknowledge we may have been overly conservative in our implementation of some policy and process changes. We are also taking steps to prudently increase volumes in the investor space,” chief executive officer Shayne Elliott ( pictured) said.

Australia’s third-largest lender said its domestic mortgage book contracted by 0.2 per cent, or $534 million, in the three months to December 31, mainly driven by falls in investor lending.

In annualised terms, the bank grew loans by 1 per cent in the 12 months to December, compared with a 4 per cent rise in the overall market. It was the slowest rate of growth since at least December 2016.

“Consumer sentiment has remained generally subdued with uncertainty around regulation and house prices impacting confidence,” Mr Elliott said.

Investors were pleased with the bank’s promise to boost lending volumes, pushing shares 1 per cent higher in early trade, ahead of the broader market.

“The markets liked the comment by the chief executive that the bank had been too conservative and they are going to be less so in the future and try to grow the investor loan books,” David Ellis, a banking analyst at Morningstar, said. “Looking backwards, lending performance, particularly for the last three months to December, for residential lending for ANZ were disappointing.”

Gross impaired assets fell 7 per cent to $2.012 billion, compared with the previous corresponding quarter, and were broadly steady compared with three months earlier.

ANZ’S impaired assets have fallen in recent quarters, barring the last, in line with the lender’s focus on safer products including owner-occupied loans. The bank’s common equity tier 1 ratio stood at 11.3 per cent, marginally lower than the 11.4 per cent reported at September 30, 2018.