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CBA broker flows continue to fall

by James Mitchell4 minute read
CBA

The major bank’s half-year results show that the group is driving more new mortgage originations through its proprietary channels.

Brokers accounted for 40 per cent of new mortgage business as at December 2017, down from 43 per cent in June and 46 per cent in December 2016.

Proprietary channels now account for 60 per cent of all new home loan originations for the group.

“Our strategic focus on improving the home loan experience for customers continued to drive increased lending through the retail bank’s proprietary channels,” the bank said.

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“CBA’s commitment to balancing regulatory requirements, returns and risk resulted in growth in the home loan portfolio moderating to 5.2 per cent in the 12 months to December 2017.”

Growth in the CBA home loan portfolio was driven by a 7.5 per cent increase in owner-occupied loans and a 0.5 per cent increase in investment home loans.

For the December quarter, interest-only lending comprised 21 per cent of total flows, below APRA’s 30 per cent benchmark.

“Fixing our mistakes”

The main highlight from the group’s half-year results, which showed a 1.9 per cent fall in cash profit to $4.7 million, was the $575 million set aside for regulatory costs and scandals.

“During this period, we have focused a great deal of effort on fixing our mistakes and becoming a better bank,” CBA chief executive Ian Narev said.

“We have taken a significant provision for regulatory and compliance costs, consistent with accounting standards.” This provision is $200 million.

“We have also taken a $375 million expense provision, which we believe to be a reliable estimate of the civil penalty a court may impose in the AUSTRAC proceedings.

“We recognise, and regret, that these costs arise from our failure to meet some standards that we should have. We will continue to work hard to do better.

“At the same time, we have been able to increase our dividend, even while providing for these costs, and strengthening all aspects of our balance sheet so that we can support customers and deliver returns for our shareholders into the future.”

[Related: CBA accreditation changes ‘a really good idea’, says broker]

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James Mitchell

James Mitchell

AUTHOR

James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.

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