NAB broker flows rise 11%

Both owner-occupier and investor volumes grew in the half to $217.5 billion and $115.2 billion, respectively.

The results showed that mortgage brokers were responsible for the majority of NAB’s new mortgage business, with 61.3 per cent of new flow coming through the broker channel.

This is markedly up from the 55.1 per cent originated by the channel in 1H22 and up from the 59.3 per cent flowing through the third-party channel in 2H22.

The broker channel is now responsible for having originated 47.7 per cent of the major bank’s entire Australian mortgage portfolio, up from 44.2 per cent last year. Meanwhile, NAB’s proprietary channel continues to diminish, with just 38.7 per cent of new lending coming through this route.

NAB noted that the bank had rolled out a range of tools and products for the broker channel in the last year, including:

• An “enhanced broker experience with straight-through processing of [its] instant pricing tool to assist with customer retention”
• A Simplified Tailored Home Loan product featuring tiered loan-to-value ratio (LVR) pricing
• Beginning the roll-out of the Simple Home Loans product (a digital end-to-end platform that works on the basis of ‘intervention by exception’), which is expected to continue through to FY25

NAB chief executive Ross McEwan commented that the bank “remain[s] focused on enhancing the customer and broker experience through initiatives such as ongoing roll-out of Simple Home Loans, Simplified products, and improved pricing tools for bankers and brokers”.

The ubank brand also grew its book over the half, with its home loans portfolio growing to $11.4 billion in 1H23, up from $9.9 billion in 1H22.

The digital bank brand, which is well progressed on its journey to integrate 86 400, recorded a 66 per cent increase on the prior half, with 95,000 new customers acquired on the new platform. 

ubank’s deposits also grew, up $2.6 billion to $27 billion.

NAB not aggressively chasing mortgage growth

While NAB’s book has been growing, the volume of new home loans (excluding limit increases and redraws in the previous period) that were originated in 1H23 dropped, falling from $49 billion in 1H22 to approximately $35 billion.

Mr McEwan said the slowdown in new mortgage lending reflected the “challenging home loan environment” over the past 12 months and NAB’s move not to actively chase mortgage growth.

The NAB CEO flagged that the bank had said last year it would “strike a balance between volume and price while maintaining risk disciplines, and that this would likely result in [NAB] growing below system.

“Over the past six months, we’ve seen this dynamic play out in terms of home loans falling below the cost of capital,” he said.

Indeed, NAB’s lending margin fell 7 bps against the prior half, primarily driven by home loan competition, which it expects to continue.

He told journalists: “What I have said is that we are still writing home loan mortgages. You will notice that we actually have had a little bit of growth in the book in the last six months across the bank, in home mortgages, so it’s not that we are out of the market at all.

“But we’ve said that we want to be righting the business at a level of cost of capital but we also want to maintain our customer relationships, so there is business being written in the bank sub cost of capital. It’s just not a market I’ve chosen to grow in, as we were for the 12 months prior to this period of time.”

He flagged that ubank is no longer offering cashbacks and NAB’s cashback is now around $2,000.

“I think cashbacks look like they’ve been coming down over last six to 12 months, which is probably a good thing,” he said.

Looking to the future, the NAB CEO said the major bank would “continue to maintain a disciplined approach in home lending” and be focused on supporting mortgage customers facing increased cost-of-living pressures (including through proactive customer engagement with customers rolling off fixed rate).

[Related: NAB reports 1% lift in loan book in 1Q23]