Insights

Loan deferrals down, big four ASX banks up?

Recent data from the RBA and commentary from Goldman Sachs points to a recovery for the big 4 ASX bank shares.
The post Loan deferrals down, big four ASX banks up? appeared first on The Motley Fool Australia. –

woman holding large pink piggy bank

The value of total loan deferrals in Australia has fallen month-over-month to approximately $50 billion or 2% in November 2020 according to the Australian Prudential Regulation Authority (APRA)’s monthly disclosure on loan repayment deferrals. This compares to the peak of more than $250 billion or 10% in May 2020.  

Goldman Sachs has summarised its key takeaways on loan deferrals and the improvements it has observed in the big four ASX banks. We take a closer look.

Big four ASX banks analysis 

Westpac Banking Corp (ASX: WBC) currently has the most substantial share of deferrals, which can be explained by its large balance sheet, according to Goldman. 

Adjusting for balance sheet size, Australia and New Zealand Banking Group Ltd (ASX: ANZ) would appear to have the largest proportion of its loan book on deferral, sitting at 3%, down from 5% in October. National Australia Bank Ltd (ASX: NAB) has the least, with 1%, down from 3% in October. The Commonwealth Bank of Australia (ASX: CBA) sits in the middle with total deferrals of 2.5%. 

In the six months of available data, Goldman observes that NAB and Bank of Queensland Limited (ASX: BOQ) have seen the biggest net improvement in mortgage deferrals as a percentage of 31 May 2020 balances. 

Consistent with disclosure provided in its FY20 result, ANZ’s mortgage deferrals fell away significant back in October, but it still experienced the least improvement on this measure. 

Private credit growth steady in November 

The Reserve Bank of Australia (RBA) has also provided updates on private credit for November 2020. In the month, business lending momentum remained weak and was down -0.2% month-on-month (vs. -0.3% in September).

That said, on a year-on-year basis, lending growth is positive, up by 0.9% given the solid trends seen in March and April from efforts by corporates/SMEs drawing down credit to support cashflows amidst the COVID-19 disruptions. 

The update cited housing credit growth showing signs of life, increasing 0.3% month-on-month in November, while year-on-year growth remained unchanged at 3.4%.  

Owner-occupier growth remains the driver of total mortgage growth and was up 0.5% month-on-month in October, while investor lending remains subdued at -0.1% year-on-year. Personal credit remains very soft and was flat month-on-month with year-on-year trends running at -12.4%. 

Overall, private and housing credit growth has remained steady in November, which feeds into the recent recovery for the big four ASX bank shares.

Man who said buy Kogan shares at $3.63 says buy these 3 ASX stocks now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

In this FREE STOCK REPORT, Scott just revealed what he believes are the 3 ASX stocks for the post COVID world that investors should buy right now while they still can. These stocks are trading at dirt-cheap prices and Scott thinks these could really go gangbusters as we move into ‘the new normal’.

Find out the names of our 3 Post COVID Stocks – For FREE!

*Returns as of 6/8/2020

More reading

Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Loan deferrals down, big four ASX banks up? appeared first on The Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!