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Brokers write $5bn more for major bank

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Reporter 5 minute read

Big four bank NAB saw its broker loan book reach $88.2 billion in the year to September 2016, increasing by almost $5 billion compared to the previous year.

According to the major bank’s financial results, released yesterday, the size of the bank's Australian broker loan book increased by 6 per cent, up from $83.5 billion for the year ending September 2015.

Indeed, the third-party channel saw the largest percentage rise in housing lending volumes, with the bank’s retail, direct and small business sector improving by 5 per cent over the year to $108.9 billion, and the NAB Business, Corporate and Specialised Business and Private Wealth channel boosting volumes by 2 per cent (to $76.8 billion).

In the Australian market, 31.7 per cent of housing lending balances were attributed to the broker channel, up 0.3 per cent from the year ending September 15, while drawdowns attributed to brokers also rose, up from 32.6 per cent to 34.4 per cent.

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Interestingly, in New Zealand, “third-party introducers” made significant headway, with the percentage of home loans coming through this channel increasing by a whopping 1,300 per cent over the course of a year – from 0.4 per cent in the year ending September 2015 to 5.6 per cent by September 2016.

The financial results also showed that there was growth in the Auckland market, with the number of brokers growing from around 100 in June 2015 to approximately 400 in the financial year 2016.

The Adviser has asked NAB for an explanation on this increase in broker activity in New Zealand, but has not yet received a comment.

However, part of the increase in broker success could be down to the fact that the big four bank recruited an additional 379 brokers across NAB-owned aggregators PLAN, Choice and Fast (nearly a 10 per cent increase on last year), bringing the total number of brokers under owned aggregators (as of Aug 2016) to 4,299.

Indeed, the major bank has said this year that it intends to become “the number one bank for brokers”, and made the full suite of NAB’s retail home loan products available to brokers.

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Speaking at the time, NAB Broker general manager Steve Kane said: “NAB will be there to support brokers as the industry continues to grow, and will place brokers and their customers at the centre of everything we do. Our changes will also help drive greater collaboration between lenders and brokers.”

He added: “The broking industry has experienced tremendous growth over the past few years, and across Australia customers are realising the tangible value brokers provide to them as trusted advisers.

“We are committed to being at the forefront of the broker market. This relaunch is a big change for our business, and we are confident that through this transformation we will become the number one bank for brokers.” 

Statutory net profit falls 94.4 per cent

Overall, the NAB Group saw cash earnings rise by 4 per cent to $6.48 billion, while statutory net profit in cash earnings came in at just $352 million.

According to the bank, the 94.4 per cent decrease in cash profit from last year reflects the “loss on sale” for both CYBG PLC (the holding company that owns Clydesdale Bank and Yorkshire Bank in the United Kingdom) and 80 per cent of NAB Wealth’s life insurance business (which sold to Nippon Life for $2.4 billion and completed on October 3, but is captured in FY16 results).

However, even excluding these discontinued operations, net profit from continuing operations decreased 5.6 per cent to $6.42 billion.

The final dividend is 99 cents per share fully franked, unchanged from the 2016 interim and 2015 final dividends.

[Related: Major bank introduces broker client advisers to ‘remove conflict’]

Brokers write $5bn more for major bank
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