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CBA chasing brokers as flows slow

by Annie Kane and Sarah Simpkins12 minute read
CBA chasing brokers as flows slow

The big four bank has boosted its investment in the broker channel, as the proportion of mortgages written by brokers has dipped to 39 per cent.

The Commonwealth Bank of Australia (CBA) has released its results for the financial year ending 30 June 2021, reporting 20 per cent growth in cash net profit after tax (to $8.65 billion).

The results were due to “an improvement in economic conditions and outlook resulting in a lower loan impairment expense and a strong contribution from volume growth in all core markets”.

Indeed, CBA’s total loan book (including Bankwest) surpassed half a trillion dollars ($516 billion) as at June 2021.


However, new loans written by brokers to the group fell, making up 44 per cent of new lending (down from 47 per cent in June 2020). This marks a continuing downward trend in broker written loans for the group.

When looking at just the major bank, CBA’s total mortgage book (excluding subsidiary Bankwest) grew to $439 billion by June 2021, having funded $66 billion of new lending in the first six months of 2021. 

This was $20 billion more than it funded in the same period last year.

However, the results show that while mortgage lending was up, the proportion of broker-introduced loans had fallen.

According to CBA, brokers wrote just 39 per cent of CBA’s new mortgages – down from 42 per cent as at June 2020. As such, 61 per cent came from the direct channel.

Overall, brokers continue to be responsible for around 46 per cent of all loans on CBA’s books (or 41 per cent when excluding Bankwest). 

CBA increasing investment in broker channel

A spokesperson for the bank told The Adviser that while the percentage of broker loans decreased relative to the broader portfolio, there had still been a “strong flow into the channel”.

“Year-on-year, we have seen a 30 per cent increase in fundings via the broker channel,” the spokesperson said.

“We are also continuing to increase our investment in the channel, including a 25 per cent increase in FTEs (full-time employees) supporting the broker channel.”

Adam Croucher, CBA general manager for third party banking, recently told The Adviser that the bank has hired around 450 additional staff to help process mortgages more efficiently, as it revamps its third-party strategy.

Reflecting on broker flows, CBA chief executive Matt Comyn said to The Adviser that there has been in-flows variation over the last five to 10 years, with the bank pulling above in some periods.

“That’s often because... some of the service levels were not good at some of our competitors, which enabled us to originate a high proportion of mortgages through the broker channel,” Mr Comyn told The Adviser.

“The broker channel is and will always continue to be a very important and relevant channel. The team has done a great job and has been very focused on working closely with brokers and also continuing to make sure that the past service times and speed to decision have been very consistent and strong during the course of the year.”

Brokers have reported, however, that the bank’s turnarounds had been blowing out over the course of the year.

For example, the bank’s time to initial credit decision had blown out to a peak of 17 business days in January 2021, and the major bank revealed to the House of Representatives standing committee on economics last month that the average time to unconditional approval via brokers was hovering around 16 days during the March quarter.

However, the bank has been gradually improving its turnarounds, with the time to initial credit decision sitting at 9.1 days in June 2021, according to the most recent Broker Pulse survey, its fastest time since July 2020.

Indeed, in its financial results, the big four bank highlighted that 85 per cent of “simple” broker loans were decisioned within two days, while the same proportion of proprietary loans were decisioned within 24 hours.

As well as updating its accreditation process and tiered servicing model last month as part of its new broker strategy, the big four bank has said that it has also been “chipping away at everything that [it] possibly can” over the past 10 months to improve its offering for brokers.

Speaking to The Adviser last month, CBA’s general manager, third party banking, Adam Croucher, said: “[W]e’ve been able to gear up to get to where we want to be, and we want to see growth, and continued growth, in the channel.”

Meanwhile, the bank has flagged an upcoming direct-to-consumer digital mortgage offering, Unloan, backed by its x15 venture capital arm, expected to roll out later in the year.

The business will be the second digital property-buying venture under x15, following Home-In, which is marketed as a digital assistant for the purchase process. 

[Related: CBA revamps third-party strategy]



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