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Mutual bank sees record number of broker-originated loans

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Reporter 6 minute read

Strength in the broker channel has helped Teachers Mutual Bank achieve a 19 per cent rise in its home loan performance, bringing its total book to $5.2 billion.

Speaking to The Adviser about the bank’s financial results, the CEO of Teachers Mutual Bank, Steve James, said that broker share had risen from 25 per cent last year to around 44 per cent in the 12 months to 30 June 2017.

“It has increased dramatically,” Mr James said, “accounting for around an extra $400 million in loans. When we looked at funded loans last year, we had something like $247 million, and this last year we had $647 million.

“I attribute that to the great work the brokers are doing out there in the third-party channel but also to the introduction of the multi brands: the UniBank brand, the Firefighers Mutual Bank brand and, of course, [the] Teachers Mutual Bank brand.”


According to the CEO, the number of brokers accredited to TMB has also grown substantially in the past year; in the prior financial year, TMB had around 2,000 brokers under it — however, that grew to around 2,800 by the end of the last financial year.

He continued: “At the end of June 2017, we had something like 2,800 brokers from about 11 different aggregators, but even as we speak, that has risen to about 3,500. 

“So that’s really grown. It shows that the name is out there — for Teachers Mutual Bank and UniBank at the moment, particularly. That is followed by Firefighters Mutual Bank. So, brokers have been approaching us, and it’s been good.” 

Mr James added that opening up a new office in Queensland and making “more inroads in Western Australia” had further boosted take-up. He revealed that while there was a “good share of broker loans from right around the country at the moment,” the largest proportion was from New South Wales, followed by Queensland and Victoria, and then WA.

Noting that the bank temporarily withdrew from investor lending in 2016 (and hiked interest-only rates earlier this year), Mr James said that the bank has been “working very closely with APRA to be under the [growth] caps”.


He continued: “Last [calendar] year, we did stop lending in the investor sector for a little while — about six weeks or so — to make sure that we stayed well under that 10 per cent cap. But, of course, that had some pressure on margins as well when everybody operating in the same space.”

The bank’s financial results show that net profit after tax (NPAT) was down on the prior financial year from $30.2 million to $27.9 million. The group attributed this decline to “tighter margins, merger costs and investment in UniBank and Firefighters Mutual Bank rebrands as well as implementing technology such as Apple, Android and Samsung Pay”.

“So, what we've tried to do is make our owner-occupier loans more attractive as we go forward… being competitive in that particular space while trying to remain under the caps for the other [investor] loans,” the CEO told The Adviser.

In deposits from households, the bank achieved growth of 17.6 per cent, above a system growth of 6.82 per cent.

Mr James added: “Our growth in home loans was close to 20 per cent [year-on-year] and our overall growth in assets was 20.6 per cent last year [to $6.7 billion], so when you consider the loan growth of 19.23 per cent — compared to the average growth of around 6 per cent — we're doing pretty well.”

The bank said that it was “delighted” with its results, “especially in a year when we undertook another merger and restricted investment lending in line with APRA requirements".

Mr James concluded: “Our multi-brand strategy is maturing successfully. The rebranded Firefighters and UniBank brands are being exposed to new audiences and gaining members, especially via the broker channel.”

[Related: Brokers flock to mutuals as big bank sentiment sours]

Mutual bank sees record number of broker-originated loans
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