After a period of shedding market share, the Commonwealth Bank of Australia finally flexes its muscles and makes itself more competitive in the home loan market, hence placing pressure on rival banks. This has been suggested by no less than Andrew Bowden, the head of investor relations for CBA’s biggest rival, Westpac.

“Andrew (Bowden) acknowledged that the mortgage market had changed because of various Australian Prudential Regulation Authority measures. However, it was still fairly rational,” Deutsche Bank’s traders told clients. “This is despite Westpac growing below system in recent months as the ‘gorilla in the market’ has become more competitive.”

The ‘gorilla’ refers to CBA, which is the nation’s biggest home loan lender with about $400 billion of high-returning assets, followed by Westpac. It slowed down in the months leading to the June 30 financial year, but it has apparently regained its bearings.

“In terms of growth momentum, CBA has enjoyed strengthening loan growth momentum over the past three months, while the other three major banks have each had softening loan growth momentum over the same period,” said Credit Suisse.

However, the source of CBA’s growth is causing concern as there is an alleged surge in loans via mortgage brokers, which are less profitable due to commissions.

“CBA has become increasingly reliant on mortgage brokers,” said USB analyst Jonathan Mott, who noted that brokers contribute 46 per cent of CBA’s mortgage sales. “While early adoption of APRA’s ‘sound lending practices’ may have affected sales this year, we don’t believe it explains this underperformance.”