Bank chases rivals on home loans
For one, it has the smallest exposure to the lucrative mortgage market of the big four banks. This means giving borrowers an extra 2 basis points on top of the Reserve's move, as it did on Friday, is less of a drag on profits.
At the same time, the bank has recently been making a concerted push to win mortgage market share from its rivals, and this should help those efforts. Latest figures put ANZ's share of the $1.1 trillion home loan market at about 15 per cent, compared with more than 25 per cent for both Westpac and Commonwealth Bank and more than 17 per cent for NAB.
While the bank makes much of its Asian expansion strategy, chief executive Mike Smith said in April it had made "tactical" investment in domestic mortgages this year.
"Everybody has always concentrated on the Asian story because that's quite different, but we should be growing everything, we've got to put the foot to the gas everywhere," he told BusinessDay.
ANZ is also the least reliant on wholesale funding, which allows it to benefit more from the improvement in global credit markets.
JPMorgan analysts have estimated that while other banks have to refinance between $25 billion and $30 billion a year in wholesale debt, ANZ needs to rollover about $19 billion a year
Finally, cutting rates may help ANZ rebuild its popularity with customers.
Frequently Asked Questions about this Article…
ANZ gave borrowers an extra 2 basis points on top of the Reserve’s move partly because it has the smallest exposure to the mortgage market among the big four, so the hit to profits is smaller. The bank is also making a push to win market share in domestic mortgages, benefits from being less reliant on wholesale funding, and may see the move as a way to rebuild popularity with customers.
ANZ added about 2 basis points of extra reduction on top of the official rate cut announced by the Reserve.
Latest figures in the article put ANZ’s share of the roughly $1.1 trillion home loan market at about 15%, compared with more than 25% for both Westpac and Commonwealth Bank and more than 17% for NAB.
Yes. The article says ANZ has been making a concerted push to win mortgage market share from rivals, and the extra rate cut should support those efforts as a tactical investment in domestic mortgages.
ANZ is the least reliant on wholesale funding among the big four, which means it can benefit more from improvements in global credit markets and faces a smaller refinancing burden—making it easier to pass on rate cuts without as much pressure on profits.
JPMorgan analysts estimated ANZ needs to rollover about $19 billion a year in wholesale debt, whereas other big banks need to refinance roughly $25 billion to $30 billion a year.
Yes. CEO Mike Smith said ANZ has made 'tactical' investment in domestic mortgages this year and emphasised they should be growing everywhere, not just focusing on the Asian story.
The article suggests cutting rates may help ANZ rebuild its popularity with customers, making the move beneficial both commercially and for public perception.
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