Margin lending runoff continues

John Kavanagh Consumer lending

The decline of margin lending to the status of an obscure financial product continued in the June 2019 quarter, when the number of client accounts fell below 100,000 for the first time since 2001.

According to Reserve Bank figures, there were 98,000 margin loan accounts open in the quarter – down 2.9 per cent from the previous quarter and down 22.2 per cent from the June quarter last year.

Total balances were worth A$11.1 billion – down 1.6 per cent year-on-year.

Bendigo and Adelaide Bank, a key lender in this segment, has seen its lending in this segment decline year after year. In its full-year results released this week the bank’s margin lending book fell 10 per cent to $1.53 billion. Five years ago this was in the order of $2 billion.

There has been no growth in the margin lending segment since the Australian equity bear market of 2008.