From Morgan Stanley:
NAB has repriced home loans more than peers in the past year and its SVRs are now the highest of the majors, with a ~20bp premium on IPL. CBA’s SVRs are at the lower end of peers, but we think ANZ and WBC are likely to reprice next.
What’s theimpact of NAB’s repricing? NAB today announced it is repricing standard variable rates (SVRs) by 7bp on owner-occupier loans (OOL) and by 25bp on investment property loans (IPL). In last week’s COTW (refer Lower Housing Loan Growth), we showed that NAB’s housing loan book is 58% OOL and 42% IPL(other majors ~34-39%). Therefore, NAB’s weighted average repricing is ~15bp. Given we already assume ~5bp re-pricing in early 2H17E and another ~5bp at the end of thathalf year, profitupside from today’s moves could be ~1% annualised. However, we think the repricing is necessary to offset margin pressure evident in the latest reporting season and is likely to push NAB’s Australian loan growth below system.
ANZ and WBC likely to reprice next: NAB’s SVRs are now above peers, with a ~20bp premium on IPL(refer Exhibit 2). Ithas repriced P+I OOL by a cumulative 22bp since Apr-2016 vs. ~11-19bp for the other majors. Ithas also repriced interest-only IPL by 55bp, which is ~25-30bp more than the others. While CBA’s SVRs are at the lower end of peers, we think ANZ and WBC are likely to reprice next given they have not done so in 2017 and their SVRs are still below NAB’s. On the regionals, we think BOQ has limited room to further reprice any home loans, while BEN may have some scope to increase IPLrates.