Statistics. Quarterly Authorised Deposit-taking Institution Property Exposures. March 2014 (released 27 May 2014)

Statistics Quarterly Authorised Deposit-taking Institution Property Exposures March 2014 (released 27 May 2014) www.apra.gov.au Australian Prudential Regulation Authority

Copyright Australian Prudential Regulation Authority (APRA) This work is licensed under the Creative Commons Attribution 3.0 Australia Licence (CCBY 3.0). This licence allows you to copy, distribute and adapt this work, provided you attribute the work and do not suggest that APRA endorses you or your work. To view a full copy of the terms of this licence, visit: Disclaimer www.creativecommons.org/licenses/by/3.0/au/ While APRA endeavours to ensure the quality of this publication, APRA does not accept any responsibility for the accuracy, completeness or currency of the material included in this Publication, and will not be liable for any loss or damage arising out of any use of, or reliance on, this Publication. Revisions Future editions of this publication may incorporate revisions to data submitted by entities after publication. APRA regularly analyses past revisions to identify potential improvements to the source data and statistical compilation techniques, in order to minimise the frequency and scale of any future revisions. Forthcoming issues This publication will be released according to the timetable published on the APRA website. Notation Amounts are expressed in Australian dollars. Both the Australian-dollar denominated transactions and the Australian-dollar equivalent of foreign-currency denominated transactions are included. The symbol '*' indicates that the data have been masked to maintain confidentiality. Glossary and explanatory notes A set of explanatory notes is provided at the end of the publication to assist the reader in understanding the source and definitions of the data. In particular, these notes help explain differences between the data presented and information publicly released by banks in their financial statements and profit announcements. Enquiries For more information about the statistics in this publication: e-mail or write to statistics@apra.gov.au Manager, Banking Statistics Australian Prudential Regulation Authority GPO Box 9836 Sydney NSW 2001 Australian Prudential Regulation Authority 2

Contents Important notice Important notice 4 Highlights Highlights 5 All ADIs ADIs Commercial property exposures Table 1a 7 Residential property exposures Table 1b 8 New housing loan approvals Table 1c 9 Banks Commercial property exposures Table 2a 10 Residential property exposures Table 2b 11 New housing loan approvals Table 2c 12 Building Societies Commercial property exposures Table 3a 13 Residential property exposures Table 3b 14 New housing loan approvals Table 3c 15 Credit Unions Commercial property exposures Table 4a 16 Residential property exposures Table 4b 17 New housing loan approvals Table 4c 18 Banks Major banks Commercial property exposures Table 5a 19 Residential property exposures Table 5b 20 New housing loan approvals Table 5c 21 Other domestic banks Commercial property exposures Table 6a 22 Residential property exposures Table 6b 23 New housing loan approvals Table 6c 24 Foreign subsidiary banks Commercial property exposures Table 7a 25 Residential property exposures Table 7b 26 New housing loan approvals Table 7c 27 Foreign branch banks Commercial property exposures Table 8 28 Explanatory notes Explanatory notes 29 Glossary Glossary 31 Australian Prudential Regulation Authority 3

Important notice This publication is currently available in two versions: an Adobe PDF version for printing, containing data for the most recent periods; and a Microsoft Excel version, containing a complete time series since 2004 of data. Revisions This edition of the Quarterly ADI Property Exposures publication includes revisions to previously published statistics, due to better source data becoming available. Two institutions resubmitted data, which changed the statistics by at least 10 per cent and $100 million. Bank of America, National Association Bank of America, National Association resubmitted data for the March 2013 and September 2013 quarters. As a result, the following statistics were revised by at least 10 per cent and $100 million: Commercial property exposures of which land development/ subdivision (foreign branch banks) revised for the quarters March 2013 and September 2013 quarters, with September 2013 revised from $678m to $575m. Bendigo and Adelaide Bank Limited Bendigo and Adelaide Bank Limited resubmitted data for the September 2013 and December 2013 quarters. As a result, the following statistics were revised by at least 10 per cent and $100 million: New residential term loan approvals of which interest only loans approved (other domestic banks) revised for the quarters September 2013 and December 2013, with December 2013 revised from $4,053m to $4,550m. Australian Prudential Regulation Authority 4

Highlights Commercial property exposures As at 31 March 2014, ADIs* held commercial property exposures of $224.8 billion. This is an increase of $5.0 billion (2.3 per cent) on 31 December 2013 and $14.3 billion (6.8 per cent) on 31 March 2013. Commercial property exposures within Australia were $183.8 billion as at 31 March 2014, 81.8 per cent of all commercial property exposures. As shown in figure A: major banks held $195.6 billion of commercial property exposures, an increase of $4.1 billion (2.2 per cent) on 31 December 2013 and $14.3 billion (7.9 per cent) on 31 March 2013; other domestic banks held $12.5 billion, an increase of $132 million (1.1 per cent) on 31 December 2013 and a decrease of $1.7 billion (11.8 per cent) on 31 March 2013; foreign subsidiary banks held $5.0 billion, a decrease of $166 million (3.2 per cent) on 31 December 2013 and $582 million (10.4 per cent) on 31 March 2013; foreign branch banks held $11.1 billion, an increase of $888 million (8.7 per cent) on 31 December 2013 and $2.4 billion (26.9 per cent) on 31 March 2013; building societies held $235 million as at 31 March 2014, an increase of $6 million (2.7 per cent) on 31 March 2013; and credit unions held $347 million as at 31 March 2014, a decrease of $135 million (28.0 per cent) on 31 March 2013. Figure A: Total consolidated commercial property exposures by ADI segment The largest property exposures were office property ($66.0 billion) and retail property ($48.9 billion). These represented 29.4 per cent and 21.8 per cent of all exposures respectively. Impaired commercial property exposures were $4.6 billion at 31 March 2014 and specific provisions and security held for commercial property were $4.5 billion. Residential property exposures As at 31 March 2014, the total of residential term loans to households held by all ADIs* was $1.20 trillion. This is an increase of $22.3 billion (1.9 per cent) on 31 December 2013 and an increase of $90.4 billion (8.2 per cent) on 31 March 2013. Owner-occupied loans accounted for 66.5 per cent of residential term loans to households. Owneroccupied loans were $795.2 billion, an increase of $13.1 billion (1.7 per cent) on 31 December 2013 and $53.7 billion (7.2 per cent) on 31 March 2013. * Excludes 'other ADIs.' See glossary. Australian Prudential Regulation Authority 5

Investment loans accounted for 33.5 per cent of residential term loans. Investment loans were $400.3 billion, an increase of $9.2 billion (2.4 per cent) on 31 December 2013 and $36.7 billion (10.1 per cent) on 31 March 2013. As shown in figure B: major banks held $971.5 billion of residential term loans, an increase of $17.9 billion (1.9 per cent) on 31 December 2013 and $72.3 billion (8.0 per cent) on 31 March 2013; other domestic banks held $125.2 billion, an increase of $3.2 billion (2.6 per cent) on 31 December 2013 and $17.8 billion (16.5 per cent) on 31 March 2013; foreign subsidiary banks held $53.5 billion, an increase of $475 million (0.9 per cent) on 31 December 2013 and $2.1 billion (4.0 per cent) on 31 March 2013; building societies held $16.9 billion, an increase of $184 million (1.1 per cent) on 31 December 2013 and $810 million (5.0 per cent) on 31 March 2013; and credit unions held $28.4 billion, an increase of $530 million (1.9 per cent) on 31 December 2013 and a decrease of $2.5 billion (8.2 per cent) on 31 March 2013. The higher growth of other domestic banks and lower growth of building societies and credit unions in the period shown in Figure B is in part due to the conversion of eight credit unions and one building society to banks. Figure B: Balance of domestic residential term loans to households by ADI segment ADIs with greater than $1 billion of residential term loans held 98.3 per cent of all residential term loans as at 31 March 2014. These ADIs reported 5.0 million loans totalling $1.17 trillion. Of these loans: the average loan size was approximately $235,000, compared to $230,000 as at 31 March 2013; $415.4 billion (35.4 per cent) were interest-only loans; and $36.8 billion (3.1 per cent) were low-documentation loans. New housing loan approvals ADIs with greater than $1 billion of residential term loans approved $73.8 billion of new loans in the quarter ending 31 March 2014. This is a decrease of $10.3 billion (12.3 per cent) on the quarter ending 31 December 2013 and an increase of $12.2 billion (19.8 per cent) on the quarter ending 31 March 2013. Of the new loan approvals: $47.5 billion (64.3 per cent) were for owner-occupied loans, a decrease of $6.7 billion (12.3 per cent) from the quarter ending 31 December 2013; $26.3 billion (35.7 per cent) were for investment loans, a decrease of $3.7 billion (12.3 per cent) from the quarter ending 31 December 2013; $29.1 billion (39.4 per cent) were interest-only loans; $9.9 billion (13.5 per cent) had a loan-to-valuation ratio greater than or equal to 90 per cent; and $440 million (0.6 per cent) were low-documentation loans. Australian Prudential Regulation Authority 6

Commercial property exposures Table 1a All ADIs' commercial property exposures (Excludes 'other ADIs') ($ million, consolidated group) Office 60,568 61,933 64,068 64,884 66,027 Retail 45,116 45,475 46,176 47,270 48,950 Industrial 24,862 24,753 25,363 26,371 26,725 Land development/subdivisions 15,563 16,016 15,567 14,894 14,790 Other residential 27,112 26,239 26,133 26,512 27,936 Tourism and leisure 8,579 8,819 8,944 8,639 8,651 Other 28,682 30,362 30,792 31,219 31,718 Total commercial property exposures 210,482 213,599 217,044 219,789 224,798 of which: Exposures in Australia 174,628 175,656 177,677 178,777 183,814 Impaired Commercial property exposures 7,848 6,488 5,743 4,922 4,558 of which: Exposures in Australia 5,639 4,245 3,448 2,691 2,430 Specific provisions 2,314 2,134 1,970 1,828 1,641 of which: Exposures in Australia 1,614 1,375 1,139 949 870 Specific provisions and security 7,630 6,319 5,551 5,008 4,509 of which: Exposures in Australia 5,345 3,954 3,213 2,659 2,373 Impaired assets to exposures 3.7% 3.0% 2.6% 2.2% 2.0% Specific provisions to exposures 1.1% 1.0% 0.9% 0.8% 0.7% Specific provisions to impaired exposures 29.5% 32.9% 34.3% 37.1% 36.0% Specific provisions and security held to impaired exposures 97.2% 97.4% 96.6% 101.7% 98.9% Number of entities* 165 164 163 163 164 * Domestic subsidiary banks are consolidated into their parents Australian Prudential Regulation Authority 7

All ADIs Residential term loans to households Table 1b ADIs' residential property exposures (Excludes 'other ADIs') (domestic or licensed books*) ($ millions) Owner-occupied 741,544 755,239 766,780 782,144 795,241 Investment 363,566 372,774 380,197 391,110 400,302 Total residential term loans 1,105,110 1,128,014 1,146,978 1,173,255 1,195,543 Number of entities 166 165 164 164 165 ADIs with greater than $1 bn of term loans Residential term loans to households Owner-occupied 724,811 738,302 749,903 765,108 778,721 Investment 359,361 368,507 375,917 386,698 396,026 Total residential term loans to households 1,084,171 1,106,809 1,125,819 1,151,806 1,174,747 * Loans with offset facilities 370,508 376,768 385,220 398,819 416,157 Interest-only mortgages 368,642 379,287 389,718 402,953 415,374 Reverse mortgages 2,495 2,607 2,622 2,637 2,648 Low-documentation loans 46,436 43,706 41,075 38,714 36,800 Other non-standard loans 1,777 1,616 1,503 1,389 1,314 Number of residential term loans to households 4,721 4,815 4,859 4,932 5,000 * Loans with offset facilities 1,318 1,353 1,380 1,424 1,479 Loans with redraw facilities 3,681 3,742 3,807 3,852 3,899 Interest-only mortgages 1,252 1,291 1,324 1,365 1,398 Reverse mortgages 29 30 29 29 29 Low-documentation loans 214 203 193 183 176 Other non-standard loans 7 7 6 6 6 Average balance of residential term loans to households 230 230 232 234 235 * ($ millions) (thousands of loans) ($ thousands) Loans with offset facilities 281 279 279 280 281 Interest-only mortgages 294 294 294 295 297 Reverse mortgages 87 88 89 90 90 Low-documentation loans 217 216 213 211 210 Other non-standard loans 238 234 232 228 224 Number of entities 27 27 27 27 28 * Domestic books for banks, licensed books for credit unions and building societies ** Loan categories are neither exhaustive nor mutually exclusive Australian Prudential Regulation Authority 8

ADIs with greater than $1 bn of term loans New residential term loans to households approved Owner-occupied 40,990 51,163 50,067 54,128 47,472 Investment 20,637 27,849 26,279 30,032 26,343 Total new residential term loans to households approved 61,627 79,012 76,345 84,160 73,815 * Low-documentation loans approved 405 572 506 459 440 Interest-only loans approved 21,813 30,535 28,797 33,159 29,091 Other non-standard loans approved 94 106 94 123 117 Third-party originated loans approved 23,380 30,814 31,155 35,143 30,244 Loans approved outside serviceability 1,897 2,477 2,285 2,625 2,290 New residential term loan approvals by loan-tovaluation ratio (LVR) of which: Table 1c ADIs' new housing loan approvals (Excludes 'other ADIs') ($ million, domestic or licensed books*) Loans approved LVR<60% 16,163 22,690 19,335 20,922 17,763 Loans approved LVR 60%-80% 24,243 30,408 30,565 34,452 30,395 Loans approved LVR 80%-90% 12,151 15,232 15,696 17,382 15,717 Loans approved LVR>90% 9,070 10,682 10,750 11,404 9,940 Number of entities 27 27 27 27 28 * Domestic books for banks, licensed books for credit unions and building societies ** Loan categories are neither exhaustive nor mutually exclusive Australian Prudential Regulation Authority 9

Table 2a Banks' commercial property exposures ($ million, consolidated group) Commercial property exposures Office 60,491 61,857 64,004 64,820 65,945 Retail 44,971 45,330 46,043 47,137 48,821 Industrial 24,712 24,604 25,254 26,261 26,624 Land development/subdivisions 15,487 15,941 15,511 14,838 14,725 Other residential 26,999 26,126 26,030 26,409 27,830 Tourism and leisure 8,554 8,795 8,921 8,616 8,630 Other 28,556 30,236 30,707 31,134 31,640 Total commercial property exposures 209,771 212,888 216,470 219,215 224,215 of which: Exposures in Australia 173,917 174,945 177,103 178,202 183,232 Impaired Commercial property exposures 7,842 6,483 5,740 4,918 4,553 of which: Exposures in Australia 5,633 4,239 3,444 2,687 2,426 Specific provisions 2,311 2,131 1,967 1,826 1,639 of which: Exposures in Australia 1,611 1,372 1,137 947 867 Specific provisions and security 7,623 6,312 5,546 5,003 4,504 of which: Exposures in Australia 5,338 3,947 3,209 2,654 2,368 Impaired assets to exposures 3.7% 3.0% 2.7% 2.2% 2.0% Specific provisions to exposures 1.1% 1.0% 0.9% 0.8% 0.7% Specific provisions to impaired exposures 29.5% 32.9% 34.3% 37.1% 36.0% Specific provisions and security held to impaired exposures 97.2% 97.4% 96.6% 101.7% 98.9% Number of entities 66 67 68 69 70 Australian Prudential Regulation Authority 10

Table 2b Banks' residential property exposures (domestic books) All banks ($ millions) Residential term loans to households Owner-occupied 703,664 717,849 731,331 746,317 758,837 Investment 354,440 363,718 371,621 382,361 391,416 Total residential term loans 1,058,104 1,081,567 1,102,952 1,128,678 1,150,253 Number of entities 67 68 69 70 71 Banks with greater than $1 bn of term loans Residential term loans to households Owner-occupied 700,723 714,077 727,515 742,447 755,676 Investment 353,399 362,519 370,405 381,092 390,320 Total residential term loans to households 1,054,121 1,076,596 1,097,920 1,123,539 1,145,996 Loans with offset facilities 359,798 365,950 374,527 388,078 405,202 Interest-only mortgages 363,985 374,596 385,381 398,462 410,737 Reverse mortgages 2,495 2,607 2,622 2,637 2,648 Low-documentation loans 46,365 43,638 41,012 38,654 36,746 Other non-standard loans 1,775 1,614 1,502 1,387 1,313 Number of residential term loans to households 4,541 4,637 4,696 4,770 4,847 Loans with offset facilities 1,268 1,303 1,331 1,376 1,430 Loans with redraw facilities 3,537 3,601 3,675 3,731 3,778 Interest-only mortgages 1,199 1,238 1,274 1,313 1,346 Reverse mortgages 29 30 29 29 29 Low-documentation loans 213 202 193 183 175 Other non-standard loans 7 7 6 6 6 Average balance of residential term loans to households 232 232 234 236 236 ($ millions) (thousands of loans) ($ thousands) Loans with offset facilities 284 281 281 282 283 Interest-only mortgages 304 303 303 303 305 Reverse mortgages 87 88 89 90 90 Low-documentation loans 217 216 213 211 210 Other non-standard loans 238 234 232 228 224 Number of entities 18 18 19 19 20 * Loan categories are neither exhaustive nor mutually exclusive Australian Prudential Regulation Authority 11

Banks with greater than $1 bn of term loans New residential term loans to households approved Owner-occupied 39,455 49,452 48,579 52,437 45,955 Investment 20,242 27,370 25,857 29,534 25,930 Total new residential term loans to households approved 59,697 76,823 74,435 81,971 71,885 Low-documentation loans approved 405 572 506 459 440 Interest-only loans approved 21,468 30,082 28,395 32,626 28,627 Other non-standard loans approved 94 106 93 123 117 Third-party originated loans approved 23,076 30,459 30,811 34,712 29,872 Loans approved outside serviceability 1,840 2,417 2,216 2,541 2,227 New residential term loan approvals by loan-tovaluation ratio (LVR) of which: Table 2c Banks' new housing loan approvals ($ million, domestic books) Loans approved LVR<60% 15,598 22,101 18,740 20,221 17,217 Loans approved LVR 60%-80% 23,503 29,579 29,822 33,664 29,655 Loans approved LVR 80%-90% 11,858 14,890 15,454 17,050 15,400 Loans approved LVR>90% 8,738 10,254 10,420 11,036 9,612 Number of entities 18 18 19 19 20 * Loan categories are neither exhaustive nor mutually exclusive Australian Prudential Regulation Authority 12

Table 3a Building societies' commercial property exposures ($ million, consolidated group) Half year end Mar 2012 Sep 2012 Mar 2013 Sep 2013 Mar 2014 Commercial property exposures Office 34 33 32 29 44 Retail 86 87 83 83 79 Industrial 55 58 59 57 55 Land development/subdivisions 24 24 22 21 20 Other residential 21 21 18 20 24 Tourism and leisure 4 4 4 4 3 Other 13 14 12 11 10 Total commercial property exposures 238 240 229 225 235 of which: Exposures in Australia 238 240 229 225 235 Impaired Commercial property exposures 1 0 2 1 0 of which: Exposures in Australia 1 0 2 1 0 Specific provisions 1 0 0 0 0 of which: Exposures in Australia 1 0 0 0 0 Specific provisions and security 1 0 2 1 0 of which: Exposures in Australia 1 0 2 1 0 Impaired assets to exposures 0.3% 0.1% 0.8% 0.4% 0.0% Specific provisions to exposures 0.3% 0.0% 0.2% 0.2% 0.0% Specific provisions to impaired exposures 100.0% 60.0% 24.0% 40.0% Specific provisions and security held to impaired exposures 127.8% 160.0% 124.0% 140.0% Number of entities 9 9 9 9 9 Australian Prudential Regulation Authority 13

Table 3b Building societies' residential property exposures (licensed books) All building societies ($ millions) Residential term loans to households Owner-occupied 12,658 12,771 12,975 13,208 13,353 Investment 3,423 3,421 3,442 3,500 3,538 Total residential term loans 16,081 16,192 16,417 16,708 16,891 Number of entities 9 9 9 9 9 Building Societies with greater than $1 bn of term loans Residential term loans to households Owner-occupied 10,855 10,960 11,162 11,364 11,473 Investment 2,758 2,745 2,777 2,809 2,842 Total residential term loans to households 13,613 13,705 13,939 14,173 14,314 Loans with offset facilities 3,261 3,360 3,486 3,604 3,726 Interest-only mortgages 2,009 2,056 2,178 2,272 2,335 Reverse mortgages 0 0 0 0 0 Low-documentation loans 13 11 10 10 9 Other non-standard loans * * * * * Number of residential term loans to households 80 79 80 81 81 Loans with offset facilities 15 15 15 16 16 Loans with redraw facilities 73 72 73 73 73 Interest-only mortgages 42 42 43 43 44 Reverse mortgages 0 0 0 0 0 Low-documentation loans 0 0 0 0 0 Other non-standard loans * * * * * Average balance of residential term loans to households 171 173 174 176 177 Loans with offset facilities 223 226 227 227 228 Interest-only mortgages 48 49 51 52 53 Reverse mortgages ($ millions) (thousands of loans) ($ thousands) Low-documentation loans 172 163 163 179 180 Other non-standard loans 186 192 189 223 155 Number of entities 4 4 4 4 4 * Loan categories are neither exhaustive nor mutually exclusive Australian Prudential Regulation Authority 14

Table 3c Building societies' new housing loan approvals ($ million, licensed books) Building societies with greater than $1 bn of term loans New residential term loans to households approved Owner-occupied 607 710 666 695 625 Investment 156 203 169 209 169 Total new residential term loans to households approved 762 913 835 904 794 Low-documentation loans approved 0 0 0 0 0 Interest-only loans approved 146 213 158 201 171 Other non-standard loans approved 0 0 1 0 0 Third-party originated loans approved 156 215 169 186 139 Loans approved outside serviceability 32 35 38 31 33 New residential term loan approvals by loan-tovaluation ratio (LVR) of which: Loans approved LVR<60% 344 376 388 448 353 Loans approved LVR 60%-80% 175 228 197 216 224 Loans approved LVR 80%-90% 108 130 126 124 122 Loans approved LVR>90% 135 179 124 115 95 Number of entities 4 4 4 4 4 * Loan categories are neither exhaustive nor mutually exclusive Australian Prudential Regulation Authority 15

Table 4a Credit unions' commercial property exposures ($ million, consolidated group) Half year end Mar 2012 Sep 2012 Mar 2013 Sep 2013 Mar 2014 Commercial property exposures Office 39 32 45 35 38 Retail 60 65 62 49 49 Industrial 105 102 91 53 46 Land development/subdivisions 79 86 54 35 45 Other residential 136 116 95 83 82 Tourism and leisure 22 22 20 19 18 Other 122 121 114 75 69 Total commercial property exposures 563 544 482 349 347 of which: Exposures in Australia 563 544 482 349 347 Impaired Commercial property exposures 37 30 4 3 5 of which: Exposures in Australia 37 30 4 3 5 Specific provisions 11 12 3 2 2 of which: Exposures in Australia 11 12 3 2 2 Specific provisions and security 45 34 4 3 5 of which: Exposures in Australia 45 34 4 3 5 Impaired assets to exposures 6.5% 5.6% 0.7% 0.8% 1.3% Specific provisions to exposures 2.0% 2.2% 0.6% 0.7% 0.7% Specific provisions to impaired exposures 31.3% 40.0% 75.6% 80.9% 53.7% Specific provisions and security held to impaired exposures 122.0% 111.4% 125.8% 109.5% 106.3% Number of entities 93 92 90 86 85 Australian Prudential Regulation Authority 16

Table 4b Credit unions' residential property exposures (licensed books) All credit unions ($ millions) Residential term loans to households Owner-occupied 25,221 24,620 22,474 22,619 23,051 Investment 5,703 5,635 5,134 5,249 5,347 Total residential term loans 30,924 30,255 27,608 27,868 28,398 Number of entities 90 88 86 85 85 Credit unions with greater than $1 bn of term loans Residential term loans to households Owner-occupied 13,233 13,265 11,225 11,297 11,572 Investment 3,204 3,243 2,735 2,796 2,865 Total residential term loans to households 16,437 16,508 13,960 14,093 14,437 Loans with offset facilities 7,449 7,458 7,207 7,137 7,229 Interest-only mortgages 2,647 2,635 2,159 2,219 2,302 Reverse mortgages 0 0 0 0 0 Low-documentation loans 58 57 54 50 45 Other non-standard loans * * * * * Number of residential term loans to households 100 98 83 81 72 Loans with offset facilities 35 35 34 32 32 Loans with redraw facilities 71 69 60 49 49 Interest-only mortgages 11 11 8 8 8 Reverse mortgages 0 0 0 0 0 Low-documentation loans 0 0 0 0 0 Other non-standard loans * * * * * Average balance of residential term loans to households 164 168 169 174 200 Loans with offset facilities 211 212 214 223 224 Interest-only mortgages 231 232 285 288 290 Reverse mortgages Low-documentation loans 170 170 170 164 160 Other non-standard loans ($ millions) (thousands of loans) ($ thousands) Number of entities 5 5 4 4 4 * Loan categories are neither exhaustive nor mutually exclusive Australian Prudential Regulation Authority 17

Table 4c Credit unions' new housing loan approvals ($ million, licensed books) Credit unions with greater than $1 bn of term loans New residential term loans to households approved Owner-occupied 928 1,000 822 997 891 Investment 240 276 253 289 245 Total new residential term loans to households approved 1,167 1,276 1,074 1,286 1,135 Low-documentation loans approved 0 0 0 0 0 Interest-only loans approved 199 240 244 332 294 Other non-standard loans approved 0 0 0 0 0 Third-party originated loans approved 149 141 175 244 233 Loans approved outside serviceability 25 26 31 53 31 New residential term loan approvals by loan-tovaluation ratio (LVR) of which: Loans approved LVR<60% 220 214 207 253 192 Loans approved LVR 60%-80% 565 601 546 571 516 Loans approved LVR 80%-90% 185 213 116 208 195 Loans approved LVR>90% 197 249 205 254 233 Number of entities 5 5 4 4 4 * Loan categories are neither exhaustive nor mutually exclusive Australian Prudential Regulation Authority 18

Table 5a Major banks' commercial property exposures ($ million, consolidated group) Commercial property exposures Office 53,220 55,130 56,510 57,333 58,067 Retail 38,590 39,356 39,700 40,830 42,135 Industrial 21,591 21,929 22,382 23,339 23,818 Land development/subdivisions 13,120 13,513 13,012 12,621 12,519 Other residential 21,219 20,762 20,860 21,226 22,489 Tourism and leisure 6,983 7,282 7,352 7,175 7,032 Other 26,558 28,558 28,775 28,953 29,563 Total commercial property exposures 181,280 186,531 188,591 191,476 195,623 of which: Exposures in Australia 146,247 149,505 150,310 151,637 156,072 Impaired Commercial property exposures 5,684 5,367 4,774 4,325 4,024 of which: Exposures in Australia 3,492 3,141 2,495 2,112 1,912 Specific provisions 1,767 1,736 1,613 1,573 1,427 of which: Exposures in Australia 1,075 986 793 706 668 Specific provisions and security 5,409 5,212 4,614 4,376 3,955 of which: Exposures in Australia 3,141 2,864 2,293 2,045 1,835 Impaired assets to exposures 3.1% 2.9% 2.5% 2.3% 2.1% Specific provisions to exposures 1.0% 0.9% 0.9% 0.8% 0.7% Specific provisions to impaired exposures 31.1% 32.3% 33.8% 36.4% 35.5% Specific provisions and security held to impaired exposures 95.2% 97.1% 96.6% 101.2% 98.3% Number of entities* 4 4 4 4 4 * Domestic subsidiary banks are consolidated into their parents Australian Prudential Regulation Authority 19

Table 5b Major banks' residential property exposures (domestic books) All major banks ($ millions) Residential term loans to households Owner-occupied 596,539 608,605 617,336 629,054 639,530 Investment 302,654 310,210 316,017 324,514 331,980 Total residential term loans 899,192 918,815 933,354 953,568 971,509 Number of entities* 4 4 4 4 4 Major banks with greater than $1 bn of term loans Residential term loans to households Owner-occupied 596,539 608,605 617,336 629,054 639,530 Investment 302,654 310,210 316,017 324,514 331,980 Total residential property exposures 899,192 918,815 933,354 953,568 971,509 * Loans with offset facilities 321,995 327,211 334,126 345,728 360,779 Interest-only mortgages 317,549 327,431 336,449 347,054 357,192 Reverse mortgages 2,099 2,136 2,161 2,184 2,201 Low-documentation loans 42,069 39,549 37,228 35,094 33,325 Other non-standard loans 1,587 1,424 1,307 1,192 1,095 Number of residential term loans to households * 3,832 3,915 3,953 4,007 4,064 Loans with offset facilities 1,120 1,147 1,172 1,209 1,255 Loans with redraw facilities 2,972 3,026 3,063 3,108 3,146 Interest-only mortgages 1,039 1,076 1,105 1,137 1,164 Reverse mortgages 25 25 25 25 25 Low-documentation loans 194 184 175 167 159 Other non-standard loans 6 5 5 5 4 Average balance of residential term loans to households 235 235 236 238 239 * ($ millions) (thousands of loans) ($ thousands) Loans with offset facilities 288 285 285 286 288 Interest-only mortgages 306 304 305 305 307 Reverse mortgages 85 85 87 87 87 Low-documentation loans 217 215 212 210 209 Other non-standard loans 267 265 264 262 261 Number of entities* 4 4 4 4 4 * Includes domestic subsidiary banks ** Loan categories are neither exhaustive nor mutually exclusive Australian Prudential Regulation Authority 20

Table 5c Major banks' new housing loan approvals ($ million, domestic books) Major banks with greater than $1 bn of term loans New residential term loans to households approved Owner-occupied 32,281 40,714 39,004 42,180 36,998 Investment 16,144 22,209 20,433 23,728 20,799 Total new residential term loans to households approved 48,425 62,923 59,438 65,908 57,798 Low-documentation loans approved 367 534 482 426 418 Interest-only loans approved 18,112 25,548 23,178 26,619 23,367 Other non-standard loans approved 29 37 34 43 79 Third-party originated loans approved 17,864 23,605 23,006 25,847 22,437 Loans approved outside serviceability 1,531 2,072 1,935 2,184 1,911 New residential term loan approvals by loan-to-valuation ratio (LVR) of which: Loans approved LVR<60% 12,451 18,527 14,982 16,390 14,223 Loans approved LVR 60%-80% 19,238 23,804 23,641 26,807 23,389 Loans approved LVR 80%-90% 9,893 12,363 12,575 14,101 12,562 Loans approved LVR>90% 6,843 8,229 8,240 8,610 7,623 Number of entities** 4 4 4 4 4 * Loan categories are neither exhaustive nor mutually exclusive ** Includes domestic subsidiary banks Australian Prudential Regulation Authority 21

Table 6a Other domestic banks' commercial property exposures ($ million, consolidated group) Commercial property exposures Office 3,818 3,316 3,569 3,688 3,768 Retail 2,635 1,955 1,934 1,975 1,886 Industrial 1,507 1,339 1,448 1,471 1,469 Land development/subdivisions 941 893 936 937 892 Other residential 3,465 3,049 2,933 3,028 2,987 Tourism and leisure 1,062 1,020 1,049 825 982 Other 745 380 444 444 517 Total commercial property exposures 14,172 11,951 12,312 12,370 12,502 of which: Exposures in Australia 13,430 * * * * Impaired Commercial property exposures 1,763 625 521 405 344 of which: Exposures in Australia 1,746 * * * * Specific provisions 422 263 231 195 137 of which: Exposures in Australia 414 * * * * Specific provisions and security 1,850 651 537 426 358 of which: Exposures in Australia 1,833 * * * * Impaired assets to exposures 12.4% 5.2% 4.2% 3.3% 2.7% Specific provisions to exposures 3.0% 2.2% 1.9% 1.6% 1.1% Specific provisions to impaired exposures 23.9% 42.1% 44.4% 48.1% 39.8% Specific provisions and security held to impaired exposures 105.0% 104.2% 103.1% 105.1% 104.2% Number of entities* 14 15 16 16 16 * Domestic subsidiary banks are consolidated into their parents Australian Prudential Regulation Authority 22

Table 6b Other domestic banks' residential property exposures (domestic books) All other domestic banks ($ millions) Residential term loans to households Owner-occupied 71,834 74,620 78,751 81,389 83,165 Investment 35,631 37,404 38,950 40,691 42,069 Total residential term loans 107,465 112,023 117,701 122,081 125,234 Number of entities* 15 16 17 17 17 Other domestic banks with greater than $1 bn of term loans Residential term loans to households Owner-occupied 69,636 71,585 75,681 78,264 80,748 Investment 35,247 36,852 38,397 40,122 41,697 Total residential property exposures 104,883 108,436 114,077 118,386 122,445 * Loans with offset facilities 28,594 29,306 30,521 32,020 33,661 Interest-only mortgages 30,907 31,790 32,937 34,830 36,554 Reverse mortgages 396 470 461 453 447 Low-documentation loans 3,494 3,398 3,160 2,991 2,903 Other non-standard loans 188 190 195 194 218 Number of residential term loans to households * 475 493 511 527 544 Loans with offset facilities 122 128 129 135 141 Loans with redraw facilities 380 395 432 445 455 Interest-only mortgages 105 109 114 120 125 Reverse mortgages 4 4 4 4 4 Low-documentation loans 16 15 14 14 13 Other non-standard loans 2 2 2 2 2 Average balance of residential term loans to households 221 220 223 225 225 * ($ millions) (thousands of loans) ($ thousands) Loans with offset facilities 234 230 237 238 238 Interest-only mortgages 294 292 288 290 294 Reverse mortgages 99 105 106 108 109 Low-documentation loans 224 226 223 220 220 Other non-standard loans 124 125 127 128 130 Number of entities* 11 11 12 12 13 * Includes domestic subsidiary banks ** Loan categories are neither exhaustive nor mutually exclusive Australian Prudential Regulation Authority 23

Table 6c Other domestic banks' new housing loan approvals ($ million, domestic books) Other domestic banks with greater than $1 bn of term loans New residential term loans to households approved Owner-occupied 5,434 6,349 6,739 7,625 6,850 Investment 2,963 3,602 3,605 4,301 3,900 Total new residential term loans to households approved 8,397 9,952 10,345 11,926 10,750 * Low-documentation loans approved 38 37 24 32 22 Interest-only loans approved 2,537 3,171 3,726 4,550 4,198 Other non-standard loans approved 65 69 60 79 38 Third-party originated loans approved 3,460 4,541 4,858 6,047 5,257 Loans approved outside serviceability 276 293 222 314 266 New residential term loan approvals by loan-to-valuation ratio (LVR) of which: Loans approved LVR<60% 2,537 2,453 2,458 2,785 2,509 Loans approved LVR 60%-80% 3,096 4,216 4,297 5,067 4,742 Loans approved LVR 80%-90% 1,261 1,641 1,850 2,108 1,869 Loans approved LVR>90% 1,504 1,641 1,739 1,967 1,631 Number of entities** 11 11 12 12 13 * Loan categories are neither exhaustive nor mutually exclusive **Includes domestic subsidiary banks Australian Prudential Regulation Authority 24

Table 7a Foreign subsidiary banks' commercial property exposures ($ million, consolidated group) Commercial property exposures Office 2,006 1,919 1,975 1,826 1,800 Retail 488 495 526 497 479 Industrial 981 851 917 920 779 Land development/subdivisions 880 944 988 758 722 Other residential 1,006 992 974 931 969 Tourism and leisure 54 44 50 44 45 Other 169 174 190 190 208 Total commercial property exposures 5,585 5,420 5,620 5,168 5,002 of which: Exposures in Australia 5,545 * * * * Impaired Commercial property exposures 367 459 410 167 165 of which: Exposures in Australia 367 * * * * Specific provisions 103 105 96 44 57 of which: Exposures in Australia 103 * * * * Specific provisions and security 344 423 366 185 170 of which: Exposures in Australia 344 * * * * Impaired assets to exposures 6.6% 8.5% 7.3% 3.2% 3.3% Specific provisions to exposures 1.8% 1.9% 1.7% 0.9% 1.1% Specific provisions to impaired exposures 27.9% 22.9% 23.3% 26.5% 34.4% Specific provisions and security held to impaired exposures 93.8% 92.0% 89.2% 111.2% 102.9% Number of entities 8 8 8 8 8 Australian Prudential Regulation Authority 25

Table 7b Foreign subsidiary banks' residential property exposures (domestic books) All foreign subsidiary banks ($ millions) Residential term loans to households Owner-occupied 35,278 34,611 35,231 35,863 36,127 Investment 16,148 16,098 16,642 17,145 17,356 Total residential term loans 51,426 50,709 51,873 53,008 53,482 Number of entities 8 8 8 8 8 Foreign subsidiary banks with greater than $1 bn of term loans Residential term loans to households Owner-occupied 34,548 33,887 34,498 35,129 35,398 Investment 15,498 15,457 15,991 16,456 16,644 Total residential term loans to households 50,046 49,345 50,489 51,585 52,041 Loans with offset facilities 9,209 9,433 9,880 10,330 10,762 Interest-only mortgages 15,529 15,375 15,996 16,577 16,991 Reverse mortgages 0 0 0 0 0 Low-documentation loans 802 691 624 570 517 Other non-standard loans 0 0 0 0 0 Number of residential term loans to households 234 229 233 237 238 Loans with offset facilities 27 28 30 32 34 Loans with redraw facilities 185 179 179 178 177 Interest-only mortgages 54 53 55 56 57 Reverse mortgages 0 0 0 0 0 Low-documentation loans 4 3 3 3 3 Other non-standard loans 0 0 0 0 0 Average balance of residential term loans to households 214 215 217 218 219 Loans with offset facilities 347 336 327 318 314 Interest-only mortgages 285 290 292 294 296 Reverse mortgages Low-documentation loans 218 217 211 208 204 Other non-standard loans ($ millions) (thousands of loans) ($ thousands) Number of entities 3 3 3 3 3 * Loan categories are neither exhaustive nor mutually exclusive Australian Prudential Regulation Authority 26

Table 7c Foreign subsidiary banks' new housing loan approvals ($ million, domestic books) Foreign subsidiary banks with greater than $1 bn of term loans New residential term loans to households approved Owner-occupied 1,740 2,389 2,835 2,631 2,107 Investment 1,135 1,559 1,818 1,505 1,230 Total new residential term loans to households approved 2,875 3,949 4,653 4,136 3,338 Low-documentation loans approved 0 1 1 0 0 Interest-only loans approved 818 1,363 1,492 1,457 1,062 Other non-standard loans approved 0 0 0 0 0 Third-party originated loans approved 1,752 2,313 2,947 2,818 2,177 Loans approved outside serviceability 33 51 59 43 51 New residential term loan approvals by loan-tovaluation ratio (LVR) of which: Loans approved LVR<60% 611 1,121 1,299 1,046 486 Loans approved LVR 60%-80% 1,169 1,559 1,883 1,790 1,524 Loans approved LVR 80%-90% 704 886 1,030 841 970 Loans approved LVR>90% 391 384 441 459 358 Number of entities 3 3 3 3 3 * Loan categories are neither exhaustive nor mutually exclusive Australian Prudential Regulation Authority 27

Table 8 Foreign branch banks' commercial property exposures ($ million, consolidated group) Commercial property exposures Office 1,448 1,492 1,949 1,972 2,310 Retail 3,258 3,524 3,884 3,835 4,321 Industrial 633 485 507 531 558 Land development/subdivisions 546 590 575 521 592 Other residential 1,309 1,322 1,263 1,224 1,386 Tourism and leisure 456 448 470 572 571 Other 1,085 1,124 1,299 1,546 1,351 Total commercial property exposures 8,735 8,986 9,947 10,201 11,089 of which: Exposures in Australia 8,694 8,984 9,896 10,142 10,881 Impaired Commercial property exposures* 28 32 34 21 20 of which: Exposures in Australia 28 32 34 21 20 Specific provisions* 20 27 28 14 18 of which: Exposures in Australia 20 27 28 14 18 Specific provisions and security* 20 27 30 16 21 of which: Exposures in Australia 20 27 30 16 21 Impaired assets to exposures* 0.3% 0.4% 0.3% 0.2% 0.2% Specific provisions to exposures* 0.2% 0.3% 0.3% 0.1% 0.2% Specific provisions to impaired exposures* 69.6% 84.9% 81.3% 63.8% 88.7% Specific provisions and security held to impaired exposures* 69.6% 84.9% 86.3% 76.5% 102.0% Number of entities 40 40 40 41 42 *Foreign branch banks may report impairments and exposures on the book of their parent Australian Prudential Regulation Authority 28

Explanatory notes ADI Industry Segments To assist users analyse the ADI industry, the industry is broken down into three industry segments: banks, building societies and credit unions. ADI means an authorised deposit-taking institution within the meaning of the Banking Act 1959. Banks are ADIs that assume or use the term bank in relation to their banking business. Data for banks are broken down into four segments: major banks, other domestic banks, foreign subsidiary banks and foreign branch banks. Major banks comprises the Australia and New Zealand Banking Group Limited, the Commonwealth Bank of Australia, the National Australia Bank Limited, and the Westpac Banking Corporation. Other domestic banks comprise all locally-owned banks excluding the major banks. Foreign subsidiary banks are those foreign banks authorised to carry on banking business in Australia through a locally-incorporated subsidiary. Foreign branch banks are those foreign banks authorised to carry on banking business in Australia through branches and are subject to specific restrictions on their deposit-taking activities. Building societies are locally-incorporated ADIs that assume or use the expression building society in relation to their banking business. Credit unions are locally-incorporated ADIs that assume or use the expression credit union or credit cooperative in relation to their banking business. A list of all ADIs is provided on APRA s website. Basis of preparation The basis of preparation of the statistics in this publication differs between commercial property exposures and residential property exposures. Both types of statistics are sourced from two levels of reporting by ADIs: Consolidated group book includes the exposures of the global consolidated operations of ADIs ('consolidated group'). Locally-incorporated ADIs with controlled entities or associates are required to report consolidated group book data in accordance with the Australian accounting standards AASB 127 Consolidated and Separate Financial Statements and AASB 3 Business Combinations. Licensed or domestic book includes the business of an ADI on a standalone basis, excluding subsidiaries and associates. The domestic book is the licensed book excluding offshore banking operations such as offshore branches. Commercial property exposures are sourced from the consolidated group books of the ADIs. Locally incorporated ADIs with controlled entities or associates are required to report consolidated group book data. For other ADIs, licensed and domestic book data are included. Domestic ADIs which are themselves subsidiaries of a domestic ADI are not included in commercial property exposure statistics; the data for these ADIs are included in the data for the domestic parent ADI. Residential property exposures are sourced from the domestic books of banks and the licensed books of credit unions and building societies. Commercial property exposures are facilities provided for the development, acquisition or improvement of real estate, where the servicing of the facility is dependent on cash flows from the property itself through sale or rental income and/or from cash flows generated from other properties owned by the borrower. Residential property exposures include only term loans to households which are secured by residential property. This is considerably narrower than the scope of commercial property exposures. Australian Prudential Regulation Authority 29

Source of statistics The data in this publication are sourced from the following returns submitted to APRA under the Financial Sector (Collection of Data) Act 2001 by ADIs. ARF 230.0 Commercial Property (Licensed ADI and Consolidated Group Books) ARF 320.8 Housing Loan Reconciliation (Domestic or Licensed ADI Books) ARF 320.0 Statement of Financial Position (Domestic Books) ARF 323.0 Statement of Financial Position (Licensed ADI) Blank copies of returns and associated instructions are available on APRA's website. Estimation of commercial property statistics The Quarterly Authorised Deposit-taking Institution Property Exposures publication includes commercial property exposure statistics for all ADIs for the March and September quarters only, until September 2008. From December 2008 onwards, statistics are included on a quarterly basis. In the March and September quarters, all ADIs are required to report their commercial property exposures. Therefore, statistics are available for all ADIs in these quarters. In the June and December quarters, only a sample of banks are required to report their commercial property exposures, with the remaining ADIs exposures estimated using their previous quarters exposures. This sample comprises those banks which have the largest commercial property exposures and together they hold approximately 99 per cent of total ADI commercial property exposures. Comparison to Australian Bureau of Statistics 5609.0 - Housing Finance The Quarterly Authorised Deposit-taking Institution Property Exposures publication includes statistics on new residential term loan approvals. A similar source of statistics is Australian Bureau of Statistics (ABS) publication 5609.0 - Housing Finance. For ADIs, the primary source of the ABS Housing Finance statistics is APRA s data collections. However, there are small conceptual differences users should be aware of when comparing the two publications. ABS dwelling commitments in the Housing Finance publication exclude land purchases and alterations to property in the key statistics. These are reported by ADIs each month, ten business days after the end of the month. New residential loan approvals in this publication are for term loans only and include land purchases and alterations. These are reported by ADIs holding a balance of more than $1 billion in housing term loans at the end of the quarter. The returns are due 15 business days after the end of the quarter for credit unions and building societies and 20 business days after the end of the quarter for banks. The differences in scope lead to small differences in the value of new loans in each publication. Australian Prudential Regulation Authority 30

Glossary ADI refers to an authorised deposit-taking institution, meaning a body corporate authorised under section 9 of the Banking Act 1959, to carry on banking business in Australia (e.g. a bank, building society or credit union). Building societies are locally-incorporated ADIs that assume or use the expression building society in relation to their banking business. Commercial property exposures are facilities for the development, acquisition and improvement of real estate, where the servicing and repayment of the facility is dependent on cash flows generated by the property itself or other properties owned by the borrower. Excluded are housing loans for owner occupation and loans to individuals or families for residential-property investment. Loans to construction companies which are paid by third parties are also excluded, where such payment is not dependent on the proceeds of the sale or rental of the property upon completion. Commercial property exposures: Industrial are facilities for the development, acquisition or improvement of Industrial property, and the servicing and repayment of the facility is dependent on the cash flows generated by the Industrial property itself through sale or rental income, and/or from cash flows generated from other Industrial properties owned by the borrower. Commercial property exposures: Land development/subdivisions are facilities for the development and/or subdivision of land, and the servicing and repayment of the facility is dependent on the cash flows generated through sale of the land, and/or from cash flows generated from other land development or subdivision activity owned by the borrower. Commercial property exposures: Office are facilities for the development, acquisition or improvement of office buildings, and the servicing and repayment of the facility is dependent on the cash flows generated by the office property itself through sale or rental income, and/or from cash flows generated from other office properties owned by the borrower. Commercial property exposures: Other residential are exposures to residential property excluding all loans to individuals or families and excluding loans to private family companies or family trusts for owner occupation. Commercial property exposures: Retail are facilities for the development, acquisition or improvement of retail buildings, and the servicing and repayment of the facility is dependent on the cash flows generated by the retail property itself through sale or rental income, and/or from cash flows generated from other retail properties owned by the borrower. Commercial property exposures: Tourism and leisure are facilities for the development, acquisition or improvement of land and buildings used in the tourism and leisure or hospitality industries, and the servicing and repayment of the facility is dependent on the cash flows generated by the property itself through sale or rental income, and/or from cash flows generated from other tourism and leisure properties owned by the borrower. Credit unions are locally-incorporated ADIs that assume or uses the expression credit union or credit co-operative in relation to their banking business. Foreign bank branches are foreign banks licensed to conduct banking business in Australia through branches, subject to a condition which specifically restricts the acceptance of retail deposits (referred to as Foreign ADIs under the Banking Act). Foreign subsidiary banks are foreign banks authorised to carry on banking business in Australia through a locally incorporated subsidiary. Housing loans includes loans for the construction or purchase of dwellings for owner-occupation and investment. Interest-only loans approved are interest-only term loans held by the reporting party and which were approved during the relevant period, irrespective of whether the funds have been advanced to the borrower. Interest-only loans are loans where the repayments, for a set term, only pay the interest on the loan and do not reduce the principal balance. Investment loans are loans to households for the purchase or construction of dwellings not for occupation by the owners. Loan-to-valuation ratio (LVR) is the ratio of the outstanding amount of the loan to the value of the property that secures the exposure. Loans approved LVR<60% are loans approved with a loan-to-valuation ratio less than 60 per cent during the quarter. Loans approved LVR 60%-80% are loans approved with a loan-to-valuation greater than or equal to 60 per cent but less than 80 per cent during the quarter. Loans approved LVR 80%-90% are loans approved with a loan-to-valuation greater than or equal to 80 per cent but less than 90 per cent during the quarter. Loans approved LVR>90% are loans approved with a loan-to-valuation greater than or equal to 90 per cent during the quarter. Loans approved outside serviceability are loans approved where the lender believes that an exception to the institution s serviceability policy is appropriate. Australian Prudential Regulation Authority 31