$ANZ Group Holdings Ltd (ANZ.AU)$ is facing some heat this ...
$ANZ Group Holdings Ltd(ANZ.AU$ is facing some heat this year due to falling lending margins in a highly competitive mortgage market.
A turnaround of its mortgage business has been a priority with the banking giant last year revealing it had struggled to process home loan applications in the wake of elevated demand. It’s led to a loss of market share for ANZ.
The bank says a critical issue for its mortgage business compared to other majors is that a third of its home loan customers are small business owners and this complicates the lending process.
A quarterly update by the group in February revealed some progress was being made to improve response times for more complex home loan applications. ANZ revealed its Australian home loans balance sheet grew slightly in the first quarter of FY22, and its key focus is to manage margins while also trying to hang onto existing lenders.
Home lending volumes fell 1 per cent in the second half of FY21 despite the notable strength in the homebuyer market. ANZ’s falling share of home lending compares with healthy gains by $CommBank(CBA.AU$ .
ANZ still has some way to go before it can confidently declare it is on top of its mortgage business. Elliott is targeting the second half of FY22 to see some improvements.
However, the bank is already reaping the fruits of improved business conditions. The brighter outlook led ANZ to release a net $567 million of unrealised bad debts, which helped drive the bank’s FY21 full-year cash profit 65 per cent higher.
ANZ is ramping up its $400 million digital transformation through the launch of its new ANZ Plus app scheduled for early 2022. Initially planned to be a transaction and savings app, $ANZ Group Holdings Ltd(ANZ.AU$ Plus is expected to offer digital home loan services by the end of this year.
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