by Chris Becker
Morgan Stanley are out with their take on the major banks housing loan growth, which remains “on track” but is going to come up against some serous headwinds when “the full impact of macro-prudential measures takes effect in the September quarter.”
- 2H17 annualized total housing loan growth for June is up at ANZ (8.3% vs 7.6%), NAB (7.6% vs 6.9%) and WBC (7.5% vs 5.7%) but remains steady at CBA (6.1% vs 5.9%)vs May data.
- ANZ, NAB and WBC are tracking ahead of our forecasts while CBA’s annualised growth for 2H17 has ended up broadly in line with our forecast of 6%.
- System IPL growth was 7.9% y-o-y vs 7.8% in May, whilst OOL growth was 6.8% y-o-y vs 6.7% in May (adjusted for restatements).
- Total housing growth y-o-y reached 7.2%, the highest since Feb 2016.
- We expect recent repricing and macro-prudential measures to impact the Sept quarter.
They still have a VERY positive case to invest in Megabank:
With capital tail risk removed, we’re more positive on the outlook for the major banks in the near term because earnings should prove resilient in 2H17E.
We expect:
(i) margin improvement from home loan re-pricing to offset slowing volume growth;
(ii)good cost control;and
(iii) broadly stable credit quality, with potential for another low loan loss charge.
However, we expect earnings headwinds to re-emerge in FY18E due to the end of the mortgage bull market and higher impairment charges.