ANZ mortgage focus showing promise: Hand

Mortgage volume issues had been evident in recent ANZ earnings reports and updates but Hand said ongoing work at the bank was delivering results in application numbers.

“Applications have started coming to us again. We're seeing volumes that we're happy with.” – Mark Hand

“We've absolutely seen that in the marketplace, that applications have started coming to us again,” Hand told bluenotes on the release of ANZ’s latest Pillar 3 disclosure statement on credit quality and capital.

“We're seeing volumes that we're happy with. The next stage is to sustain that.”

The Pillar 3 statement for the quarter ending 30 June 2019 showed a total provision charge of $A209 million for the June quarter, broadly flat compared with the 2019 first half quarterly average. The individual provision increased $A68 million to $A258 million.

ANZ’s total loss rate was 13 basis points, the same as the first half rate.

Group Common Equity Tier 1 ratio (APRA Level 2) was 11.8 per cent at the end of June 2019, an approximately 30 basis point increase for the June quarter.

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For a transcript of the conversation click here.

At ANZ’s first half result presentation in May, the bank foreshadowed home loan volumes in Australia declining during the June quarter, Owner Occupied loans by 0.2 per cent and Investor loans 1.8 per cent (June 2019 compared with March 2019).

“The time to say ‘yes’ to the customer was too long,” Hand conceded. But applications improved in July with the improved credit policy clarity and reduced approval times.

Hand also emphasised the better application rate was not at the expense of credit quality. Nor had the bank shifted its emphasis away from owner occupiers.

He said ANZ saw owner occupiers as the “prime market” but the bank had “probably overcorrected and ignored the investor to an extent”.

“We've seen investor come back in recent applications to be about 25 to 30 per cent of our volumes.”

Hand also spoke about the transformation project under way in the Australian banking operations.

You can hear the full conversation in the video above. 

Andrew Cornell is managing editor of bluenotes