Suncorp, which has a much larger insurance business, last year signed a deal to sell its bank to ANZ for $4.9 billion. Suncorp’s ensuing rapid growth in home loans raised market questions about whether it was looking for easy gains ahead of selling to ANZ.
But Suncorp maintained its lending was “high quality and conservatively positioned”. It also noted, as previously, that it aimed to “prioritise portfolio margin”.
“While this was a seasonally low quarter in a highly competitive market, our home lending portfolio has continued to grow and we are seeing strong service levels [and] turnaround times,” a Suncorp spokesman said.
Omkar Joshi, portfolio manager at Opal Capital Management, said he thought Suncorp’s home lending slowdown was “being driven by a conscious focus on managing the margin rather than chasing growth at any cost”.
“It’s always a fine balance between managing margins and growth. I don’t think it matters too much for ANZ shareholders given how small Suncorp’s bank is in the scheme of the broader ANZ business,” he said.
Competition for loans has been intense and just last week, Macquarie and ANZ, two of the most aggressive banks in the mortgage market, said they were producing better returns deploying capital offshore as competition crimped profits in domestic housing lending.
Commonwealth Bank of Australia from June 1 will stop offering cash backs to new mortgage customers in a decision made this week to protect its net interest margin, as the big four bank results demonstrate margins deteriorated sector-wide in the March quarter.
Bank of Queensland, which had a lending spurt under former chief executive George Frazis, also last month posted largely flat home loan growth in the past six months, which it said reflected the “prioritisation of margin and economic return over volume growth in a highly competitive market”.
Source: afr.com