Suncorp: tighter verification means slower loan growth
SUNCORP says it is tightening lending standards following increased regulatory scrutiny, and the crackdown could cool growth in the home-loan book.
The Brisbane-based lender, with 126 branches, said the change included seeking more detailed information about living expenses. It maintained that the alteration did not mean the previous standards had breached responsible lending standards.
"Suncorp has been complying with (standards) … at an industry level there is increased focus on verifying information provided to banks by customers for the purpose of seeking a loan," it said.
But it said the royal commission into banking had triggered the gaze on lending processes and the testing of information provided by customers. "In turn we have observed regulators talking about their expectations of lenders," it said.
This increased focus on verification "will contribute to an ongoing moderation of growth in home lending over fiscal 2019", it said.
The comments came as Suncorp revealed home lending had grown 0.8 per cent, or $361 million, to $47.96 billion in the past quarter.
But business lending dropped 0.8 per cent, or $90 million, to $10.84 billion, which it largely linked to agribusiness customers paying back debt.
"The moderation of home lending growth is expected to continue, driven by a slowing market and impacts associated with regulatory reforms," it said. Suncorp would still try to grow above industry averages.
Suncorp stuck with guidance given in August that margins will be squeezed. Blaming "sustained pressure from price competition and elevated funding costs", it reiterated that net interest margins would be "at the low end" of a target range of between 1.8 per cent and 1.9 per cent.
A large jump occurred with Suncorp's gathering of at-call deposits lifting 4.7 times industry averages in the past quarter. But home and consumer loans in arrears lifted 5.2 per cent to $510 million, which Suncorp said was linked to problems with some long-term borrowers.
Shares closed down 17 cents to $13.83