There's no doubt that ASX bank shares are doing it tough but one of our big banks is pulling ahead of the pack when it comes to growing its residential mortgage business.
This bank is National Australia Bank Ltd. (ASX: NAB), although the news isn't enough to excite investors with NAB's share price hovering just below breakeven in after lunch trade at $24.63.
In contrast, the Commonwealth Bank of Australia (ASX: CBA) share price jumped 0.9% at $71.90, Westpac Banking Corp (ASX: WBC) share price added about the same to $26.21 and Australia and New Zealand Banking Group (ASX: ANZ) share price fell 0.1% to $26.78.
The big banks are underperforming the market with the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) index rallying 1.7% as resources stocks led the charge higher.
Bank with the "Most-est"?
Shareholders in NAB can at least take comfort in knowing that its home loan book grew faster than its peers, according to APRA's data that was reported by Macquarie Group Ltd (ASX: MQG).
The bank's home loan growth came in at 5.3% for the month of November – taking its 12-month growth rate to 4.7%.
CBA was the second best on a monthly basis at 4.2% while Westpac only inched up 1% and ANZ Bank fell 0.4%.
The growth in NAB's loan book is particularly pleasing as credit growth continues to moderate. What's interesting is that the slowdown is driven by non-bank lenders, according to Macquarie.
"The slowdown in growth was largely driven by non-ADIs decelerating their annualised growth from ~30% to ~10%," said the broker.
"While this could be just a one-off aberration, we believe a more likely explanation lies in nonbanks starting to implement tighter lending standards."
Still more Gloom than Boom
But one reason why investors may not be too thrilled by NAB's strong market gains is because it may come at the expense of profit margins.
NAB is the only one of the big four banks that didn't increase its mortgage rates in the last few months. From that perspective, more is not always better.
On the other hand, some of its competitors may have gone the other way by focusing on quality over quantity to offset the margin squeeze and to target safer borrowers who are more able to afford loan repayments in the event of a market downturn.
Having said that, I am still underweight on the banks although that could soon change if I start to see a moderation in the decline in home prices.
