A non-major bank has stated its intent to generate “more growth” from the third-party channel, despite experiencing technical hurdles and lending shortfalls last year.
Bendigo and Adelaide Bank has outlined its ambitions to further develop its broker distribution, in spite of the “teething problems” it faced after the introduction of its new lending platform in 2017.
Following the release of the lender’s half-year results for the 2018 financial year (FY18) on Monday (12 February), chief financial officer Richard Fennell said: “In the last half year, we went live with our new lending platform in our broker channel, [but] the reality of that was there were a few teething problems and we did have to be careful about getting out there and driving too much volume as we work through some of those teething problems.
“We’ve got most of those under control. There’s a final update that’s going to go live with that system towards the end of this month, which gives us confidence to get out there and bring some more growth in that third-party channel.”
Mr Fennell also attributed a reduction of activity through the third-party channel to a greater than expected volume drop-off for investor and interest-only (IO) loans, driven by regulatory compliance. But he believes that the decline has been alleviated by continued growth in the owner-occupier space.
“The third-party channel has certainly done a lot more in investor/interest-only and that’s come off, but the growth that we’ve seen in owner-occupier P&I in local connection continues and that continues to be a [focus],” Mr Fennell added.
According to managing director Mike Hirst, the lender recorded a 13 per cent growth in owner-occupier lending in the six months leading up to December 2017, which he believes is a sign that the bank has been “fulfilling customer needs”.
“The bank experienced strong growth in loans to home owner-occupiers in an environment where competition for those customers remains fierce,” Mr Hirst said.
“While lending to home investors was curtailed by caps applied by [the Australian Prudential Regulation Authority], all other metrics indicate that we are fulfilling our customers’ needs by providing a premium banking experience,” Mr Hirst added.
On a whole, the bank recorded a $231.7 million statutory profit after tax in the first half of FY18, with its total cash earnings up by 10.7 per cent to $225.3 million.
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