Australia Markets open in 5 hrs 28 mins

ANZ Bank update reveals improving home loan volumes

James Mickleboro
ASX Bank

The Australia and New Zealand Banking Group (ASX: ANZ) share price could potentially bounce back from Thursday’s selloff this morning following the release of its Pillar 3 update.

What was in the update?

Every quarter ANZ is required to provide an update on credit quality, capital, and Australian housing mortgage flows as part of its Pillar 3 disclosure statement.

Today’s update revealed that ANZ recorded a total provision charge of $209 million for the June quarter. This was broadly flat compared with the first half quarterly average, while the individual provision increased $68 million to $258 million. The total loss rate came in at 13 basis points, which was consistent with the first half loss rate.

At the end of the period ANZ’s Group Common Equity Tier 1 ratio was 11.8%, up 30 basis points since the end of the March quarter. And on a pro forma basis, which includes announced divestments and the recently announced capital changes, ANZ CET1 ratio is now 11.5%.

This means the bank is comfortably over APRA’s unquestionably strong benchmark CET1 ratio of 10.5% ahead of the January 1 deadline.

Home loan update.

During the June quarter the bank’s forecast for home loan volumes in Australia to decline proved accurate. The bank saw Owner Occupied home loan volumes fall 0.2% and Investor home loan volumes slide 1.8% compared with the March quarter.

However, ANZ experienced an improvement in trends during the month of July. They improved after actions taken in recent months to clarify credit policy and reduce approval turnaround times had a positive impact.

ANZ’s Executive Australia Retail & Commercial, Mark Hand, explained: “We have taken action to give our customers greater certainty by improving turnaround times and providing greater clarity to our bankers, mobile lenders and mortgage brokers about our lending policies.”

Adding: “We are seeing an increase in application volumes following the policy and process changes, the next stage is to maintain that and see it translate into settlements over the coming months.”

This could be another positive indicator for the housing market and good news for the banks and property listings companies Domain Holdings Australia Ltd (ASX: DHG) and REA Group Limited (ASX: REA).

Does this make ANZ the best bank to buy or is this buy-rated bank share still the one?

The Motley Fool’s #1 BANK STOCK for 2019

BRAND NEW! For a limited time, The Motley Fool Australia is giving away an urgent new investment report with all the details on our #1 BANK STOCK for the next 12 months and beyond…

Now, if you’ve been around this site for any length of time, you know The Motley Fool usually shuns bank shares.

But we’ve recently discovered a ‘hidden in plain sight’ bank stock with what we think is mouth-watering potential.

With the company boasting nearly 25% net profit growth every year for the last 5 YEARS…

And the shares paying a fully franked dividend that beats the pants off term deposits!

So if you like steady, high-growth income plays – we’ve got you covered!

You’re invited. Simply click the link below to discover our #1 ASX bank stock to profit in 2019. To scoop up your FREE copy, simply click the link below right now. But you will want to hurry – this free report is available for a brief time only.

CLICK HERE FOR YOUR FREE REPORT!

More reading

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended REA Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019