The big four bank has ramped up automation, in a bid to rectify broker loan assessment times that dragged behind its competitors.
Westpac released its 2021 financial year results on Monday (1 November), revealing that its total loans had grown by $17.7 billion (up 3 per cent) in the year to 30 September, to $709.7 billion.
Net loans in the consumer division were up by 5 per cent ($18 billion worth) to $415.7 billion, with growth in home loans offsetting a $1.4 billion decline in personal lending.
Australian housing loans were up by 3 per cent ($14.7 billion) over the year, to a total of $456 billion, with $23.8 billion in new occupier lending offsetting a reduction in investor loans of $7.5 billion.
The second half of the year had seen most of the gains, with $12 billion in gross new loans, compared to $2.6 billion in the first half and outflows of $8.2 billion in FY20.
Under half (43.3 per cent) of new home loans were originated via the direct channel during the year, while 56.7 per cent came via brokers. Westpac's total loan book at the end of the year was 52.8 per cent proprietary, 47.2 per cent broker.
Despite the growth in loans, net interest income shrank by 2 per cent year-on-year and net interest margins were four basis points lower with Westpac noting “historically low interest rates and strong competition” in mortgages as well as increased costs around its “Fix, Simplify and Perform” strategy.
Meanwhile in a review of FY21 laid out in its annual report Westpac stated that it had “lagged peers in mortgage processing via brokers”.
According to Westpac, its median third-party loan approval time came to 11.7 days in September, slimming down from 16.5 days in September last year. Direct channel approvals on the other hand came to 9.7 days in September, compared to 10.7 in September 2020.
In contrast, Momentum Intelligence’s Broker Pulse report found brokers had seen average turnarounds across lenders at around eight business days during August.
In an investor and media presentation, Westpac stated that it has an “ongoing focus to improve approval times” and is continuing to review its credit and operational processes.
Around 29 per cent of loan applications had been manually reviewed in FY21 with the remaining 71 per cent facing auto-credit decisioning. The year before, Westpac had used automation to assess 54 per cent of applications.
Westpac chief executive Peter King stated there had been “discussion on processing times”, with the bank drawing up a road map for improvements.
“To do well in mortgages, we must be competitive on price application speed and borrowing capacity – or volumes drop off quickly,” Mr King told investors and journalists on Monday morning.
Westpac also flagged its digital mortgage origination platform that it is in the process of rolling out to brokers in FY22.
Around 10 per cent of brokers in the bank’s network are already using the platform, with Westpac aiming to onboard the majority of brokers by the end of the first half-year.
The big four bank is aiming to ramp up its loan digitisation, noting that 86 per cent of loan applications via the direct channel had been processed on the new mortgage origination platform in FY21.
The bank is aiming to have all home loans across both the broker and direct channels processed on the platform by 2024.
"We have also made strong progress on making it simpler and faster to do business with us, including hiring additional people to help process applications and this will continue to be a focus for us," a Westpac spokesperson told The Adviser.
Westpac also has culled more than half of its mortgage products in line with its simplification strategy, having gone from 161 offerings to 68.
In the business lending division however, Westpac saw net loans decline by 5 per cent ($6.7 billion), due mostly to lower mortgages and a 4 per cent decrease in business lending.
Sarah Simpkins is the news editor across Mortgage Business and The Adviser.
Previously, she reported on banking, financial services and wealth management for InvestorDaily and ifa.
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