CBA loan book shrinks three months running, the first time in decades

afr.com:

Commonwealth Bank’s mortgage book has shrunk for the third month in a row, an unprecedented loss of share for the country’s largest lender.

The decline was most acute for borrowers living in their homes, adding to pressure on chief executive Matt Comyn to arrest the fall even as the bank tries to avoid the loss-making mortgages written amid intense competition earlier this year.

Commonwealth Bank’s home loan book has gone backwards in the month to the end of September. Nikki Short

The bank’s lending to owner-occupiers and housing investors fell to $542.2 billion at the end of September, Australian Prudential Regulation Authority data shows. This was down on $543 billion in August, $544.4 billion in July and $546.3 billion at the end of June.

It is the first time CBA’s mortgage book has shrunk for three consecutive months since at least 2004, and the first quarterly fall since 2011. Over the latest quarter, lending fell 0.75 per cent, or an annualised rate of 3 per cent.

CBA also shrank in the hotly contested owner-occupier segment; these loans totalled $362.15 billion in September, down on $362.99 billion in August. Loans to property investors totalled $180.06 billion in September, down on $180.02 billion at the end of August.

The bank will be concerned about the decline, and will likely reduce pricing to regain lost momentum, analysts and brokers say.

“There is a point coming where they will say ‘enough is enough’, and if these trends continue, I would expect CBA to be more aggressive on price in the future,” said Morningstar’s Nathan Zaia, who added that the bank was trying to manage profit margins and had increased its business lending where returns were better. “Still, they wouldn’t be happy,” he said.

CBA’s share