“Stronger broker partnerships” have helped drive above system home lending growth, a non-major lender has noted, however, the bank’s CEO has said that he’s supportive of changes recommended by the Productivity Commission.
Suncorp yesterday released its full-year 2018 (FY18) financial results, reporting 6.2 per cent growth in home lending in the year to June 2018, despite “moderated” growth in the second half of FY18 “in response to market conditions”.
The lender’s mortgage portfolio has risen to $47.6 billion, up from $44.8 billion in FY17, with Suncorp noting that the growth was 1.2 times above system.
The share of home loans distributed through Suncorp’s broker network also grew in FY18, from 66 per cent to 67 per cent.
In its presentation notes, Suncorp attributed its above-system home lending growth to “simplified origination processes, an increased focus on customer retention and headroom within macro-prudential limit settings,” which it claimed was “complimented by competitive and consistent price offerings as well as stronger broker partnerships”.
Further, Suncorp CEO and managing director Michael Cameron noted the bank is committed to improving its broker service through greater lending efficiencies.
“We have also continued to strengthen relationships with our network of brokers who value faster turnaround times on loan approvals, and have been working hard to meet their expectation,” he said.
However, when The Adviser asked for Suncorp’s view regarding the Productivity Commission’s call for an end to the payment of trail commission to brokers, Mr Cameron said: “I think the first thing that has to happen is that customers need to be very aware of what they’re paying and what the incentives are attached to the services that they’re providing.
“The second thing is that brokers are generally providing choice and access to products and services that is a benefit when done the right way. We need to preserve that.
“The only thing we need to be careful of in moving down this path, is to make sure there is a level playing field and that there’s fairness across the approach.”
The CEO added: “We support the move towards those changes and it’s really the process that has gone through to achieve the outcome that’s important.
“Whatever gives a better outcome to the customer is, at the end of the day, what's really important to us.”
Home lending breakdown
Suncorp’s results also revealed that owner-occupied home loans made up 72 per cent of the bank’s mortgage portfolio, up from 70 per cent in FY17.
The share of investor home loans fell from 30 per cent to 28 per cent over the same period, with Suncorp reporting investor lending growth of 4 per cent in FY18, well below APRA’s former 10 per cent cap.
Additionally, the portion of interest-only loans fell by 6 per cent in FY18, from 28 per cent to 22 per cent, which the lender said was reflective of the 18 per cent share of new loans settled with interest-only repayments in FY18, 12 per cent lower than APRA’s 30 per cent cap.
Despite reporting overall lending growth of 6.1 per cent ($58.7 billion portfolio), profits underlying Suncorp’s banking and wealth division dropped by $21 million, from $396 million in FY17 to $375 million in FY18.
Moreover, Suncorp Group’s total net profit after tax (NPAT) fell by 1.4 per cent, from $1.07 billion in FY17 to $1.05 billion in FY18.
According to the non-major, its profit loss was attributable to “accelerated investment of $146 million in the marketplace”, and a “four-fold increase in regulatory costs to $54 million”.