Commonwealth Bank chief executive Matt Comyn yesterday rejected suggestions that the bank was failing to implement more rigorous income and expense verification in its home lending business, which some have said explains why the bank is growing share in that market so strongly.
Comyn acknowledged that he had heard these suggestions, saying they were wrong. He said the bank has implemented all the required changes to its mortgage underwriting process.
CBA grew its mortgage portfolio at 1.5 times system during the December 2019 half, an unusual achievement for a big bank. Compared with system growth if 2.8 per cent during the December half, CBA's home loan volume grew 4.8 per cent to A$535.1 billion.
Speaking at the presentation of the bank's interim results yesterday, Comyn said: "It surprised us. We would not expect it to persist."
He said the key to the bank's success in growing its mortgage book was consistent execution.
"There has been variance in the market. Brokers move to institutions where they can get speed to decision in 24 or 48 hours," he said.
Comyn said another factor in the strong growth was an increase in the average size of loans and strong funding growth.
But for Comyn the key is streamlined services enabled by digitisation. He said 5.9 million customers use the CommBank app - up from 5.3 million a year ago. Eighty per cent of the bank's home lending is digital end-to-end.
One interesting disclosure in CBA's financial report is that since APRA removed the requirement that lenders apply a 7.25 per cent floor when assessing serviceability, the bank has applied a minimum floor rate of 5.4 per cent.
This change would have had a significant impact on borrowing capacity.