Brokers help boost bank’s mortgage book by $2bn

The bank said that this was “loan growth delivered by increasing numbers of both brokers and aligned advisers”. No specific numbers on broker growth were released, however performance from this channel was particularly strong in new business.

The report reads: “Residential mortgage competition, particularly in the owner-occupied market, remained intense. Within this environment, AMP Bank delivered residential mortgage book growth of [$1.9 billion] in FY16 to [$16.5 billion]... driven by strong growth in owner-occupied lending. Growth in investment property lending has increased over FY16 since AMP Bank recommenced activities in this area of the market.

“Above system loan growth was delivered through both the broker and AMP aligned adviser channels. Sales through the AMP aligned channel in FY16 were up 24 per cent on FY15. However, its portion of AMP Bank's mortgage new business fell to 22 per cent from 24 per cent in FY15 due to strong growth in the mortgage broker channel.”

Overall, there was strong uplift in operating profit for AMP Bank (from $104 million to $120 million) largely driven by the mortgage growth.

The bank has said that it will continue to “grow through the broker network”.

Responding to a question asked by The Adviser relating to the bank’s broker plans, Craig Meller, CEO and managing director of AMP, said: “We're expecting to have continued strong growth in the broker channel. The amount of mortgages that are originated through the broker channel would be more than half of the mortgages originated by AMP bank and we have very strong relationships across the industry and expect very good growth there.”

AMP may “adjust approach” to investor refinancing

When asked by The Adviser whether the bank had any plans to cease accepting new mortgage refinancing applications from investors — as Commonwealth Bank and Bankwest have recently done — Mr Meller hinted that it could follow suit.

The AMP CEO said: “We made some moves a week or so ago and if you look at the background to those actions the macroprudential regulations that are being placed upon the industry are essentially putting a speed limit on the amount of growth on investor loans for the banking industry as a whole can achieve.

“When large players take action to slow their book, unless AMP bank takes action accordingly it could blow our business up with very significant increases in volumes so as we see the market environment changing so we'll be adjusting our approach in response to what we're seeing in the marketplace more generally.”

The financial report reveals that owner-occupied loans made up 74 per cent of the mortgage portfolio at 31 December 2016, while investment property loans were 26 per cent.

It concluded: “Management continues to target total lending growth at or above system, subject to regulatory growth caps, return on equity hurdles and funding availability.”

[Related: AMP Bank to increase rates for investors in 2017]