ANZ’s retention of cashback mortgage offers helped to deliver slight market share gains against its major bank peers in the June quarter, according to disclosures published on Thursday by the bank. The home loan book of the country’s fourth largest bank expanded by A$6 billion to $299 billion in the three-month period, driven mostly by demand from owner occupiers. This represented a 2 per cent increase in the mortgage assets of the bank, which means ANZ is now the fastest growing major lender in the country. ANZ was the only major bank to grow faster than system this year, with rivals such as National Australia Bank recording mortgage growth of barely 1 per cent in the June quarter. The retention of ANZ’s cash back offer of up to $4000 to refinancing borrowers appears to have boosted demand for its mortgage products throughout the quarter.NAB and CBA were among the first lenders to withdraw cash incentives in May and appear to have lost market share as a consequence. ANZ announced last week that it would begin winding back cash incentives from 26 August. From that date all new home loans requiring lender’s mortgage insurance will not be eligible for cashback payments. The bank will still market incentives to new borrowers with loan to value ratios of less than 80 per cent, but has halved the cashback offered to $2000. ANZ also revealed that it eked out growth in lending to small and medium businesses during the quarter, with loans and advances rising $1 billion or 2 per cent to $61 billion. That growth was offset by a $1 billion decline in lending to large corporates to $207 billion. Arrears data confirmed that the credit cycle had turned, with a higher number of home borrowers struggling to make loan repayments. In Australia, the percentage of ANZ’s home loan book that was 90 or more days in arrears rose three basis points to 0.63 per cent. However, the increase in the group arrears was more pronounced in New Zealand where the arrears percentage climbed eight basis points to 0.53 per cent. The quarterly charge for bad and doubtful debts came in at around $77 million. Analysts responded positively to the disclosures, saying that the deterioration in credit quality was unfolding slowly. Goldman Sachs analyst Andrew Lyons upgraded his 2023 earnings forecasts by more than $225 million. Lyons is now expecting ANZ to post full year earnings before one off items of $7.78 billion. “Quarterly BDDs were better than what was implied by prior second half 2023 forecasts, and we note that while asset quality has continued to normalize, the process is slow and indicators remain better than pre-Covid levels,” Lyons told clients in a report. Despite a contraction in lending within the institutional banking arm, Lyons believes ANZ has made significant progress to improving the profitability of the division. He has set a 12 month price target on ANZ’s stock-price at $27.55. ANZ scrip outperformed most other listed banking stocks on Thursday, but closed down 23 cents to $24.59.