NAB has announced a reclassification of household data provided previously as part of its regulatory reporting obligations. The reclassification, similar to the recent ANZ announcement, has no impact on customers and does not alter risk weighted assets, regulatory capital, cash earnings, balance sheet or risk appetite. The announcement was released to the ASX, not via the NAB web site or media releases.
The data being restated covers the period from July 2014 to June 2015. The main movements are:
- Restatement of owner occupied housing from $165.4bn to 126.5bn
- Restatement of investment housing from $66.6bn to $93bn
- Restatement of non-housing from $11.5bn to $23.7bn
We have run an update to our APRA loan model which shows that the market for investment loans grew at a revised 11.16% (compared with the APRA 10% “speed limit”) and we estimate that NAB grew its investment portfolio by 13.79%, well above the hurdle.
These reporting adjustments make us question the accuracy of the reporting processes. We would observe that as a result of the banks adjustments the value of investment loans are higher, but the growth trajectory is similar to previously calculated, provided the one-off adjustments are run back through the full year.
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