The amount of new business coming through the broker channel for one major bank has dropped by 4 per cent in just six months, according to new figures.
The 2017 half year results for Commonwealth Bank showed that the broker channel wrote 46 per cent of new business home loans for the bank in the six months to December 2016, down 4 per cent from the prior half and down 2 per cent on the same period in 2015.
The drop led to an uptick in the proportion of loans coming through the proprietary, which accounted for 54 per cent of new business loans in the six months to December 2016 (up from 52 per cent in the same period in 2015).
Brokers ‘critical part’ of CBA strategy, but proprietary is a 'priority'
When asked by The Adviser whether the bank was moving away from the broker channel, CEO Ian Narev said: “Our view for a while and certainly going back to the time when we made our investment in Aussie Home Loans is the broker network provides a really important proposition that customers like and want. We don’t see it as going away. We see it's good for a lot of customers and it has a role and therefore we see continuing to partner with brokers as a critical part of the group strategy.
“That said, our preference is always going to be, as you can imagine — for all sorts of reasons — to service as many of our customers through our own channels as we possibly can. That's a strategic priority for us.”
Mr Narev told The Adviser that the increase was attributable to the fact that the bank had “upgraded and put more lenders in the branches — people who are able to have lending specific conversations with customers”.
He added: “We've been able to provide more analytics to support those lenders and others in the branch and we’ve really invested in the branch proposition and as a result of that we've seen our own share of the proprietary channel go up at the time when the markets have gone down — so for us that is a pretty good outcome.”
Half year results overview
Overall, the broker channel saw an uptick in the proportion of all home loans coming through the broker channel – rising from 44 per cent in the six months ending December 2015 to 45 per cent in the six months to June 2016, and coming in at a high of 46 per cent in the last half of the calendar year 2016. Likewise, the proprietary channel dropped from 56 per cent in six months to December 2015 to 54 per cent by the end of 2016.
The total balance for the home loan portfolio in Australia was $423 billion in the six months ending December 2016, up from $393 billion in the same period a year prior.
Owner-occupied home loans made up 63 per cent of the book, with investment loans holding firm at 33 per cent. However, the six months to December 2016 saw a 4 per cent rise in new investment loans (to 37 per cent) or a 6 per cent rise when compared to the six months ending December 2015.
To curb some of this growth, the bank has tightened up on investor lending – announcing last week that it would not be accepting new investor mortgage refinance applications from other financial institutions "until further notice" and that it would be increasing rates on its interest-only mortgages for investors from 3 April.
The half year results also show that, in the six months ending 31 December 2016, CBA secured 140,000 new home loans, including 15,000 for first home buyers.
CBA’s market share for home loans as at the end of 2016 was 25.4 per cent – up marginally from the same period in the prior year, when the market share was 25.1 per cent.
Home loan arrears reduced over the period, with 30+ days arrears decreasing from 1.21 per cent to 1.12 per cent and 90+ days arrears reducing from 0.54 per cent to 0.53 per cent.
Statutory net profit after tax (NPAT) for the six months ending December 2016 was $4.89 billion up 6 per cent.
[Related: Big four bank hungry for investor loans]