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Broker-originated loans on the rise for major bank

by Reporter6 minute read

ANZ has revealed that the percentage of broker-originated home loans has risen in both Australia and New Zealand, while proprietary loans are steadily falling.

According to a report of ANZ’s financial results for the year ending 30 September 2016, 49 per cent of ANZ’s Australian home loans were broker originated, up from 48 per cent the year before, and 47 per cent in the year ending September 2014. This reveals that the proportion of the home loan portfolio coming from the proprietary channel has dropped by one per cent every year for the past three years.

In the financial year 2016, the majority of Australian home loans came through the broker channel, with 52 per cent of mortgages coming from the third party.

The results also show that brokers in New Zealand originated 3 per cent more of the home loan portfolio in the financial year 2016, up from 31 per cent in the year ending September 2015.

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Flow in this market held steady at 41 per cent for brokers, with mobile mortgage managers accounting for 10 per cent. The remainder is from branches.

Mortgage overview

Looking at the group’s mortgage portfolio, Australian home loan lending saw funds under management (FUM) grow by 7 per cent, with the total portfolio up from $231 billion in the financial year 2015 to $246 billion in the last year – representing 43 per cent of group lending, and driving $3.3 billion of revenue.

The report states that ANZ held a total of 975,000 Australian home loans in the last financial year, and “helped 168,000 people to buy a property”. The bank also noted that gross sales in home loans for the year ending September 2016 was $65 billion.

The average loan size in Australia in the last financial year was $252,000, up $10,000 on the year before, and while owner-occupier loans rose from 58 per cent to 62 per cent, investor home loans were down 3 per cent to 34 per cent – largely due to tighter lending curbs – and lo doc home loans dropped from 7 to 5 per cent.

The majority of ANZ’s Australian mortgages were in VIC/TAS (31 per cent), with 30 per cent in NSW/ACT, 18 per cent in QLD/NT, 15 per cent in WA and 6 per cent in SA.

According to the bank, it now has 15.5 per cent market share in Australia for home loans, making it third place in the market.

The number of ANZ home loans taken out in New Zealand rose from 502,000 last year to 511,000 in the financial year 2016, with total FUM rising from NZ$68 billion to NZ$73 billion. Around 45 per cent of all home loans in New Zealand were taken out in Auckland.

The bank said, in the New Zealand market, it was “continuing to improve the quality of [its] book by reducing appetite in segments such as foreign income earners and long-term interest only loans”.

ANZ New Zealand chief executive officer David Hisco said one of the challenges for the New Zealand economy at present was a slower rate of growth in deposits than for lending; the banking sector makes up the difference via offshore funding which is relatively more expensive.

“Many New Zealanders see housing, particularly in the current low interest rate environment and in cities like Auckland where there is high demand for accommodation, as the most profitable way to get a return on their money.

“That’s why ANZ New Zealand supports the Reserve Bank’s tightened restrictions on investor residential lending.”

Profits down by 24 per cent

While the bank performed well in home loans, overall, the results showed that statutory profits after tax for the financial year ending September 2016 fell by nearly a quarter to $5.7 billion, largely due to a “significant reshaping of the business”.

The 2016 full year result for the bank shows that statutory profits were down 24 per cent, while cash profit was down 18 per cent to $5.9 billion.

Next year’s results are also expected to be impacted by the ongoing changes to the bank, such as its recent sale of the bank’s retail and wealth businesses in Singapore, Hong Kong, China, Taiwan and Indonesia, and the potential sale of its life insurance, advice and superannuation and investments business in Australia.

ANZ CEO Shayne Elliott commented: “We are pleased with the initial progress that has been made this year in reshaping our strategy and setting ANZ on a path towards a sustainability improvement in customer outcomes and shareholder returns.

“We have a clear strategy and a consistent focus on the implication of our business and actively rebalancing our portfolio. Importantly, we have the organisation aligned and we have established momentum in relation to the work that still needs to be done. This sets us up well to increase the pace of execution in 2017 and to deliver a better bank for customers and for shareholders.”

[Related: ANZ says lending curbs will continue to cool property market]

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