Mortgage brokers wrote $871.6 million of new home loans to Tasmanian-based lender MyState Bank in the financial year 2017, accounting for nearly three-quarters of new mortgages at the bank.
Releasing the figures for the year to 30 June 2017 on Friday (18 August), the lender revealed that broker-originated loans were up by 40 per cent on the prior year, as the lender increasingly focuses on its offering to the third-party channel.
Overall, the 4,138 brokers operating across both MyState and The Rock (which merged with MyState in 2011) helped the bank grow its loan and deposit book ahead of system while maintaining strong credit quality.
Broker-originated loans make up 62.1 per cent of MyState’s Home Loan book at 30 June 2017.
When asked by The Adviser why broker-originated loans had grown by more than 40 per cent on last year, CEO and managing director Melos Sulicich said: “We’re focused on delivering our broker partners excellent service. We’ve done a lot of work to refine our origination process to make things as easy for them to do business through us and focusing on service turnaround time.
“Our service turnaround times for the last 12 months through the broker channel is very good; never more than two or three days and most are at just one day. So, we haven’t fallen in and out of service like many other banks have. So, from our perspective it’s just about being consistent about managing our flows coming in and being consistent about managing the process.”
He added: “The brokers we deal with enjoy that and enjoy the benefit of having consistency of service and consistency of policy as well. That’s what we’ve focused on — delivering consistent and very good service and not opening the gates to all and sundry.”
Huw Bough, MyState’s group executive and a mortgage broker, added: “We are firmly committed to the mortgage broker channel which provides an important source of growth.
“During the year, we have introduced a number of technology innovations for the broker channel including a new electronic home loan origination service, expediting our settlement times. We have delivered a mobile app which allows our brokers to remotely verify their customers, provided the ability to order valuations online and have introduced a new broker portal making it easier for brokers to do business with us.”
He added: “We continued to increase our market share and at 30 June 2017 our loan book was $4.3 billion, up [by] 10.8 per cent from $3.9 billion at 30 June 2016. This is well above national system growth, and we have maintained very high credit quality.”
The group also reported that, for the first time, loans outside Tasmania increased to more than 50 per cent.
Notably, the bank’s NSW loan book grew by 79 per cent to $754 million on the prior financial year, which Mr Sulicich said was also largely due to “focusing on the right brokers” and good support from business development managers (BDMs).
The CEO told The Adviser: “We’ve had some very good, on-the-ground BDM support in NSW dealing with a group of brokers who understand our service proposition, understand our policies and we’re just delivering the right thing for them. It really is relatively simple in just making sure that we’re dealing with a group of people that want to deal with us and delivering to them a high-quality service.”
He added that the majority of the book growth, including in NSW, was for owner-occupier mortgages with a sub-80-per-cent loan-to-value ratio (LVR).
While the investor book represented 21 per cent of the total book, the bank said that it was working to “ensure [it] remain[s] within APRA’s growth limits”.
The bank reported statutory net profit after tax (NPAT) of $30.1 million, up by 6 per cent on the prior year but slightly below the underlying net profit of $31.1 million reported in FY16.
Earnings per share were 34.0 cents, compared with 35.5 cents in FY16.
According to the bank, the “slight reduction in earnings reflected a competitive environment during a period in which it delivered a number of significant transformational technology projects targeted at enhancing its future performance”.
The directors declared an unchanged final dividend of 14.5 cents per share, fully franked, payable on 13 September 2017 to shareholders.