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Brokers, wholesale funder spur major bank lending rise

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Charbel Kadib 6 minute read

A big four bank has reported that the third-party channel has originated $9 billion in home loans over the past 12 months. 

According to NAB’s full-year 2018 (FY18) financial results, brokers and NAB-owned white label funder, Advantedge, originated $9 billion in home loans over the year, with the third-party contributing $107.5 billion to the bank's total loan book.*

The share of NAB's home lending originated by the third-party channel increased from 33.7 per cent to 35.5 per cent. 

In comparison, home loans originated through NAB’s proprietary channel and its subsidiary UBank increased by $700 million, from $104 billion to $104.7 billion. Mortgages originated through its business and private banking division increased by $400 million, from $90.4 billion to $90.8 billion.


Overall, NAB’s home loan portfolio grew by approximately $10 billion, to $303 billion in FY18.

Owner-occupied home loans made up 59.1 per cent of NAB’s mortgage portfolio, up from 58 per cent in FY18, while the proportion of loans to investors dropped from 42 per cent to 40.9 per cent.

The proportion of interest-only loans also declined, falling from 29.8 per cent to 24.5 per cent.

NAB also reported that its share of the home loan market remained stable at 15.4 per cent.

NAB reports 14 per cent profit drop following “tough year”


Despite the $10 billion rise in its loan book, NAB has reported a 14 per cent decline in its cash profits to $5.7 billion. NAB CEO Andrew Thorburn has attributed the drop to $530 million in restructuring costs and $261 million in customer-related remediation costs.

However, Mr Thorburn said that he was pleased with the result amid a “challenging” operating environment.

“It’s certainly been a tough year and a challenging environment, obviously with questions of reputation and trust, a housing slowdown, margin compression and many global developments of note,” Mr Thorburn said.

“Despite this, we at NAB have stayed focused, we have delivered a credible, underlying result in whats been a year of significant investment and change inside and outside the bank.”

“Churn doesn’t make sense”

Further, Mr Thorburn has said that the bank would be placing a greater focus on its existing customers, particularly in the home loan space.

The NAB CEO claimed that NAB’s decision to keep its standard variable rate (SVR) on hold following out-of-cycle hikes form Westpac, ANZ and Commonwealth Bank was motivated by its desire to earn the “trust and loyalty” of its clients and reduce “churn”.

“Banking does need to change; we need to focus back on customers, building loyalty and appreciation with them,” the CEO said.

“For me, it doesn’t make a lot of sense when you’ve got a long-term product like a mortgage that the churn is after three or four years, and thats because theyre getting more aggressive discounts and cheaper prices if they go back into the market.

“What were trying to signal here is we value our existing customers. Weve got almost one million home loan customers at NAB, and were signalling to them that we appreciate their loyalty, we appreciate your business, and we want to keep this rate on hold for as long as we can to acknowledge that.” 

Following the release of ANZ’s FY18 results, CEO Shayne Elliott also warned against changes in the mortgage market that would increase churn.

Speaking to The Adviser, the ANZ CEO reiterated his support for the current broker remuneration model, claiming that without trail commissions, brokers would be incentivised to “churn” loans.

*This story was updated on 2/11/2018 to reflect that $107.5bn reflected NAB's total broker-originated loan book.

[Related: Major bank ‘highly dependent’ on brokers, says CEO]

Brokers, wholesale funder spur major bank lending rise
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Charbel Kadib

Charbel Kadib

Charbel Kadib is the news editor on The Adviser and Mortgage Business.

Before joining the team in 2017, Charbel completed internships with public relations agency Fifty Acres, and the Department of Communications and the Arts.

Email Charbel on: This email address is being protected from spambots. You need JavaScript enabled to view it.


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