The Australia and New Zealand Banking Group (ASX: ANZ) share price could potentially bounce back from Thursday's selloff this morning following the release of its Pillar 3 update.
What was in the update?
Every quarter ANZ is required to provide an update on credit quality, capital, and Australian housing mortgage flows as part of its Pillar 3 disclosure statement.
Today's update revealed that ANZ recorded a total provision charge of $209 million for the June quarter. This was broadly flat compared with the first half quarterly average, while the individual provision increased $68 million to $258 million. The total loss rate came in at 13 basis points, which was consistent with the first half loss rate.
At the end of the period ANZ's Group Common Equity Tier 1 ratio was 11.8%, up 30 basis points since the end of the March quarter. And on a pro forma basis, which includes announced divestments and the recently announced capital changes, ANZ CET1 ratio is now 11.5%.
This means the bank is comfortably over APRA's unquestionably strong benchmark CET1 ratio of 10.5% ahead of the January 1 deadline.
Home loan update.
During the June quarter the bank's forecast for home loan volumes in Australia to decline proved accurate. The bank saw Owner Occupied home loan volumes fall 0.2% and Investor home loan volumes slide 1.8% compared with the March quarter.
However, ANZ experienced an improvement in trends during the month of July. They improved after actions taken in recent months to clarify credit policy and reduce approval turnaround times had a positive impact.
ANZ's Executive Australia Retail & Commercial, Mark Hand, explained: "We have taken action to give our customers greater certainty by improving turnaround times and providing greater clarity to our bankers, mobile lenders and mortgage brokers about our lending policies."
Adding: "We are seeing an increase in application volumes following the policy and process changes, the next stage is to maintain that and see it translate into settlements over the coming months."
This could be another positive indicator for the housing market and good news for the banks and property listings companies Domain Holdings Australia Ltd (ASX: DHG) and REA Group Limited (ASX: REA).
