BOQ records broker loan growth

The growth was driven by a $997 million increase in housing lending in 1H21, representing annualised growth of 6.5 per cent on 2H20, or 1.6 times system growth.

BOQ attributed this rise to increased owner-occupied loans and weighted to a higher proportion of fixed rate lending compared with previous periods.

“The positive performance was driven by embedding the retail banking strategy, which included mortgage process simplification, improved retail banking and lending capability, an uplift in customer experience and quality third-party broker relationships,” the group said in its results.

The bank recorded total gross loans and advances (GLA) of $48.1 billion, up 5.0 per cent on 2H20 and up 2.0 per cent on 1H20.

Broker-originated settlements at 35 per cent

BOQ Group reported total spot balance in its housing portfolio of $32.2 billion, up from $31.2 billion in 1H20, with owner-occupiers contributing 62 per cent (up from 61 per cent in 1H20), and investors contributing 38 per cent (down from 39 per cent in 1H20).

The non-major bank said that 23 per cent of the portfolio was originated by the broker channel, up from 20 per cent in 1H20 and 21 per cent in 2H20.

The proportion of housing settlements originated out of BOQ and Virgin Money Australia (VMA) accredited brokers was at 35 per cent in 1H21.

The broker channel grew by $371 million in 1H21, representing annualised growth of 24 per cent, with BOQ stating that settlement volumes have more than doubled compared with 1H20 in the third-party channel.

BOQ said that the result was achieved by continuing to build and grow new and existing third-party relationships, competitive pricing, improved customer retention, “simplified” end-to-end mortgage processes, and consistent credit decisions.

“Settlement volumes have more than doubled compared to 1H20,” BOQ said in its results.

“Levels of run-off were initially elevated but have moderated through focused client retention initiatives. Broker and customer experience have improved due to the release of new broker-enabled technologies and the delivery of consistent process efficiencies.”

There were 5,579 brokers accredited with BOQ and 4,792 brokers accredited with VMA as at 28 February, according to the results.

BOQ looks to grow broker share

Commenting on the broker channel performance during a webcast where he discussed the results, BOQ CEO and managing director George Frazis said that while loan flows via the broker channel was around 35 per cent, “at the market level, it’s probably close to 50 per cent”.

Mr Frazis said that while settlements through the broker channel has “accelerated”, it “still only” represents 35 per cent of the group’s flow.

“We would like for that to increase and that will continue,” he said.

Elaborating further on BOQ Group’s focus on increasing broker share in the mortgages’ portfolio, BOQ Group interim group executive group Chris Screen noted to The Adviser that in the broader market, brokers facilitate around 60 per cent of all new residential mortgages, and said BOQ “has not traditionally participated at that level in its broker network”.

He added that the bank has increasingly focused on the broker channel in the last couple of years and that it would continue to build relationships with brokers, while also digitising the mortgages process, spearheaded by general manager BOQ Broker, Kathy Cummings.

“We’ve made some inroads already. But there is still substantial opportunity for us in the broker channel given the amount of flows that comes from that channel across the industry,” he said.

Mr Frazis said that turnaround times and “time to conditional yes” is around three days via the broker channel.

BOQ reported that “time to yes” via the direct channel is two days, up from one day in 1H20 and 2H20.

“This [broker] is still a channel that we’ve got quite a bit of opportunity for further growth,” Mr Frazis said.

“The broker channel for us is really important. We’ve made a huge amount of improvement in terms of how we deal with brokers, and we’ve also extended the broker network that we’re operating with. We still see this as a potential going forward in terms of growth.”

Mr Frazis concluded: “Once we’re able to put mortgages on the new digital platform, then it opens up a whole new channel for us that we haven’t tapped into.

“Effectively, we’ll be growing across all of our channels and ensuring that while we’re growing, we’re optimising revenue.”

[Related: Expanded BOQ Group to focus on mortgage growth]