A non-major bank chief is calling for banking regulator APRA to aid in boosting its profits... Mortgage reclassification draws APRA attention...
ME seeks more profit with APRA help
Super fund-owned ME Bank chief Jamie McPhee wants banking regulator APRA to aid in boosting its profits by further increasing the capital major banks need to hold against mortgages, according to the Australian Financial Review.
ME reported 94% of its income comes from home loans and the bank has seen an 8% lift in its underlying profit to $30.2 million for the first half of 2016 on Thursday, largely due to a 9% rise in net interest income to $149.3 million on its $20 billion worth of mortgages helped by rate rises.
From July the average floor on risk-weighted capital to be held against mortgages will reach 25% for major banks, up from an average of 16% - compared to the average for smaller banks of 39%.
"That has gone some way towards levelling the playing field. But we'd like to see that gap continue to close - 25 per cent to 39 per cent is still a pretty significant difference," McPhee said.
Mortgage reclassification draws APRA attention
The widespread reclassification of mortgages from investment to owner-occupier loans has caught the attention of banking regulator, APRA.
In a letter to all Australian Deposit-taking Institutions (ADIs), APRA has warned the banks to be consistent and accurate.
“A number of ADIs have recently reported significant changes in housing loan purpose between investment and owner-occupied.
“These data are used in public policy decisions, prudential supervision and statistical publications. Where the change in loan purpose is not reported correctly (i.e. from the period that the change occurred), APRA, the Reserve Bank of Australia (RBA) and the Australian Bureau of Statistics (ABS) are impeded in accurately ascertaining the underlying movements in housing loans.
“Reporting of fixed term housing loans must reflect the current purpose of the loan because the split by housing loan purpose is important for monetary policy and financial stability considerations.”
Super fund-owned ME Bank chief Jamie McPhee wants banking regulator APRA to aid in boosting its profits by further increasing the capital major banks need to hold against mortgages, according to the Australian Financial Review.
ME reported 94% of its income comes from home loans and the bank has seen an 8% lift in its underlying profit to $30.2 million for the first half of 2016 on Thursday, largely due to a 9% rise in net interest income to $149.3 million on its $20 billion worth of mortgages helped by rate rises.
From July the average floor on risk-weighted capital to be held against mortgages will reach 25% for major banks, up from an average of 16% - compared to the average for smaller banks of 39%.
"That has gone some way towards levelling the playing field. But we'd like to see that gap continue to close - 25 per cent to 39 per cent is still a pretty significant difference," McPhee said.
Mortgage reclassification draws APRA attention
The widespread reclassification of mortgages from investment to owner-occupier loans has caught the attention of banking regulator, APRA.
In a letter to all Australian Deposit-taking Institutions (ADIs), APRA has warned the banks to be consistent and accurate.
“A number of ADIs have recently reported significant changes in housing loan purpose between investment and owner-occupied.
“These data are used in public policy decisions, prudential supervision and statistical publications. Where the change in loan purpose is not reported correctly (i.e. from the period that the change occurred), APRA, the Reserve Bank of Australia (RBA) and the Australian Bureau of Statistics (ABS) are impeded in accurately ascertaining the underlying movements in housing loans.
“Reporting of fixed term housing loans must reflect the current purpose of the loan because the split by housing loan purpose is important for monetary policy and financial stability considerations.”
