ANZ Group reported marginally higher quarterly cash profit on Thursday despite indications of declining mortgage demand in Australia’s housing market. The bank’s cash profit grew 1% from the average of the prior two quarters to A$1.90 billion, supported by increased lending volumes and improved margins.
The lender noted that mortgage application values remained broadly flat compared to the previous quarter, primarily due to participation in a government support scheme launched in late March that allows property buyers to secure financing with deposits as low as 5%. However, excluding the impact of this assistance program, mortgage application values declined 5% from the second quarter and fell 12% in the period between the federal budget announcement and late July.
ANZ attributed the slowdown to Australia’s recent property tax policy changes that eliminated certain concessions for investment property owners. The mortgage demand weakness aligns with signals from larger competitors. Commonwealth Bank of Australia reported mortgage applications had dropped 15% since property tax modifications in May, while Westpac indicated a 20% decline in mortgage applications and projected investor housing credit growth would halve in the coming year.
On profitability metrics, ANZ’s net interest income excluding markets rose 2% from the first-half quarterly average. The bank’s common equity tier 1 ratio, a key regulatory measure of financial reserves, stood at 12.51% as at June 30, up from 12.4% on March 31. Its group net interest margin, measuring the spread between borrowing and lending rates, increased 1 basis point to 1.54% during the quarter.
As the fourth-largest lender in Australia by market capitalization, ANZ holds a smaller share of the residential mortgage market compared to its three major rivals. The nation’s top four banks collectively control more than 70% of the mortgage market.
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