(11 February 2011 – Australia) The Commonwealth Bank of Australia has pledged it will ramp up residential mortgage lending, in an effort to recapture market share lost when the bank slowed new loan growth in the wake of the Global Financial Crisis.The bank’s chief executive Ralph Norris yesterday conceded that the Commonwealth Bank’s reputation had suffered as a result of the group’s decision to raise its standard variable rate by 45 basis points, close to double the Reserve Bank’s official movement, in November.
The bank’s first-half results showed that the bank’s new loan growth was below system, and its share of the mortgage market had dropped, only marginally, from 26 percent a year ago to 25.9 percent.
Despite the slight detraction, the bank revealed that in the final two months of last year the number of home loans funded increased 16 percent; the loans were approved before then, but are not counted on the bank’s books until funding is approved.
The increase was interpreted by the market as a clear sign that Commonwealth planned to regain market share lost to rivals, especially NAB and ANZ.
‘It’s fair to say that we tightened up our lending criteria and that had a particular impact on the first-home buyers segment,’ Mr Norris said.
‘You can see that we had an uptick in the second quarter of the last half in funded loans and I think that will continue in the current quarter,” Mr Norris added.
‘We are looking to grow at system, which is 8-9 percent.’
Mr Norris said Commonwealth had reduced its exposure to the first-home buyer market.