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Broker support of listed lender drives loan book growth

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Francesca Krakue 3 minute read

The managing director of a non-major lender says one of the main drivers of the company’s loan book growth recorded a substantial uplift” in support from the third-party channel.

In a recent ASX update, non-major lender Auswide Bank reported that its underlying loan book grew by 8.9 per cent, rising from $2.3 billion in the 2014-15 financial year to $2.5 billion as at 30 June 2016.

Managing director Martin Barrett told The Adviser that the company saw a significant increase in support from the third-party channel during the past financial year.

“Our strategy has been about improving our capability both in South East Queensland from a branch-based lender perspective, and also building more capability in the third-party broker space,” Mr Barrett said.

“Last year for us represented some great success on both those fronts where we saw a substantial uplift in support from brokers.”

Mr Barrett added that Auswide hopes to continue to build on its relationship with the broker channel and realise its goal of having the capacity to service $100 million worth of home loan approvals per month.

To achieve that in the third-party space for us is all about capacity in the back end, to be able to adequately service those loans that brokers are referring to us,” he said.

“We’re working on trying to ensure that we can be consistent by trying to ensure that at all times the brokers receive a relatively similar level of service and turnaround times.

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“If we can lift to $100 million a month through the broker channel, that will be material for us and will allow us to continue to grow our balance sheet around the 9-11 per cent level.”

Auswide on growth path

In an investor presentation to the ASX at the end of August, Auswide Bank said it was seeking further M&A opportunities following its acquisition of Your Credit Union (YCU) earlier this year.

The non-major lender reported that its loan book grew by 14.4 per cent to $2.7 billion in the 2015-2016 financial year, largely due to the amount of loans acquired through the merger.

Mr Barrett told The Adviser that the merger was the first between a listed ADI and a mutual in 11 years and for Auswide, “demonstrated that it can be done”.

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“We have a willing board that have a view that a particular offer – in this case, one that represented a bigger branch network, a larger balance sheet to support customers and a bigger distribution network, as well as payment to members – they saw that as representing, ultimately, the best interests of members and members overwhelmingly voted for it,” he said.

“We found that there was a relatively difficult path to go through all the regulatory and legal requirements of the transaction, because one of these types of deals hasn’t been done for so long. Nonetheless, we got through that.

“We believe now, given the fact that the merger has been successful, that we have the templates, the corporate knowledge, the opportunity to be able to engage with other mutuals and the IP to be able to bring those transactions to success.”

Fintech partnerships

Auswide revealed in its ASX investor presentation that it acquired a 19.3 per cent equity stake in Australia’s second fully licensed peer-to-peer lender MoneyPlace, settled on 4 January 2016.

Auswide said at the time that the stake in MoneyPlace positioned the bank to benefit from technology disruption across the banking sector and accelerate consumer lending ambitions.

Mr Barrett said the relationship with MoneyPlace has been successful.

“We’re seeing some significant improvement in terms of the consumer finance that’s been generated through there,” he said.

“We do have an interest in terms of looking at what might be in the fintech space around business banking and what might be in the fintech space around home lending as well.

“We look to see how these organisations might challenge the way we think about doing business.”

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