NAB's wavering mortgage book

Ian Rogers

CEO Ross McEwan set out to spin a tale of moderation in credit stress and resilience across material chunks of the NAB’s customer base, given ballooning offset balances of the more privileged components of the bank’s customer list for one thing.
 
Fifty-seven per cent of NAB’s total assets are mortgages and the bank’s overall market share in Australia is 14.1 per cent, more or less half that of CBA.
 
Asset quality metrics released by NAB yesterday overall paint a measured, even pleasing picture of the way things were five weeks ago.
 
Loan arrears of 90 days or more is often the key performance metric to monitor in bank reporting and over the March 2023 half NAB have a neat story to tell.
 
Loans 90 days past due in the A$333 billion mortgage book halved over two years, and the rate fell from 93 basis points in the March 2022 half to 67 bps now.
 
“Early stage arrears are deteriorating modestly,” the bank stated in its investor presentation for the half. The bank put 30-day mortgage arrears at 1.22 per cent, below the 10-year average.
 
The bank said 1.1 per cent of NAB’s home loan portfolio was in negative equity, a proportion set to worsen.
 
NAB have $94 billion in fixed rate mortgages to either roll to variable rates, or refinance, with 88 per cent of this to expire over the next two years.
 
With the bank maintaining its resolve on balancing risk with volumes, NAB grew at 0.6 times system in this most critical market segment over the half. Thus, new business volumes are wallowing, with a decline of $7 billion in the level of drawdowns over each of the last two halves.
 
On market share data drawn from APRA’s monthly series, NAB have yielded market share every month since rolling Citi Australia’s mortgage book into its own in mid 2022.