CEO Nuno Matos says home loans barely cover the cost of capital, despite strong volume recovery in second half
ANZ chief executive Nuno Matos has told investors that home lending is not a priority for the bank, even as ANZ’s mortgage book returned to market-pace growth in the second half.
Speaking on ANZ’s full-year results call today, Matos said mortgages would remain an important customer need and ANZ would keep competing hard for them. But, he added, “as a transactional bank, it is not at the centre of our strategy”.
Matos told analysts that industry returns on home loans are borderline at covering the cost of capital and ANZ would be less present when margins are irrational and more active when pricing invites it.
Slower mortgage growth would not trouble him and he expects the mortgage market to grow more slowly, which Matos argued it does not materially affect bank returns. Rather, he is more interested in growing ANZ’s customer base than in inflating its balance sheet by competing on margin.
For retail customers, the ambition is for ANZ to be their main account, payments and cards provider, with home lending part of that relationship rather than the centrepiece.
That vision runs through the bank’s ANZ 2030 strategy, of which Matos said in an interview with ANZ’s in-house publication bluenotes that 2026 was a foundational year.
“We were very clear that we needed to go into a very important transformation of the organisation,” he said. “What I can say is that the transformation is happening at pace and the businesses are gaining momentum.”
Investment continues anyway
Matos’s comments land as the major banks rethink how they distribute home loans. Westpac lifted its proprietary share of new home loans to 36% in its full-year result, even though industry data shows broker market share hitting a new record.
ANZ is also investing in its own proprietary channel. The bank is increasing the number of proprietary home lenders as part of a significant push to strengthen its origination capabilities across digital platforms and people. Matos suggested ANZ was only at the beginning of its investment in proprietary channels.
He has, however, avoided setting a target for the channel mix. At last year’s results, Matos said: “We are not targeting a ratio of brokers versus proprietary.”
Brokers remain central to ANZ’s growth. Matos credited improved broker onboarding processes with making ANZ much friendlier to the broker channel, helping it return to market-pace growth.
Home lending improves
Even if mortgages aren’t front and centre of ANZ’s growth story going forward, its Australia Retail home loan book grew 4% over the year to 30 September 2026, reaching $274.7 billion.
Matos noted ANZ’s book grew at 1.1 times system in the second half. He credited fixes to service issues, ANZ’s entry into the First Home Buyers Guarantee Scheme after being an outlier, and the broker onboarding improvements. He expects ANZ’s volumes to stay close to the market in 2027.
Brokers wrote 71% of ANZ’s new home loans in FY26, up from 68% a year earlier, while proprietary channels slipped from 32% to 29%. Broker-originated loans now make up 63% of the total home loan book, up from 61%.
Home loans held by business and private bank customers grew 5% to $83.9 billion. ANZ now reports these in its Business & Private Bank division rather than Australia Retail.
Suncorp Bank is shrinking ahead of its migration to ANZ. Suncorp has stopped taking new lending applications, with those customers redirected to ANZ. Suncorp Bank’s net loans fell 1% to $72.2 billion.
Margins hold, arrears rise
Australia Retail’s net interest margin rose three basis points to 2.12% for the year. Higher earnings on ANZ’s replicating portfolio, the bank’s interest rate hedging program, offset what ANZ described as lower asset margins due to competition. Chief financial officer Farhan Faruqui said Australian home lending accounted for roughly two basis points of margin pressure.
The division’s cash profit rose to $1.71 billion from $771 million. The prior-year figure was depressed by restructuring and remediation charges. Group cash profit rose 31% to $7.59 billion.
Borrower stress is building, with 90-plus-day mortgage delinquencies rising 12 basis points over six months to 95 basis points. However, 87% of mortgage customers remain ahead on repayments.
House prices to fall
ANZ’s base-case economic forecasts, which it uses to set loan-loss provisions, assume Australian home prices fall 4.3% in 2026 and another 3.4% in 2027. The result follows the RBA lifting the cash rate to 4.85%, its highest since 2008.
Matos said that 2027, when the Suncorp migration and ANZ’s single customer platform are due, would set up the next phase.
“It is the year that if it is well-delivered, at the end of that year, we’ll be in a much stronger competitive position. And then we can start the second phase which is where we start accelerating growth, and outperform the market.”
