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Here for the long haul: CBA commits to brokers

by Charbel Kadib12 minute read
Matt Comyn

The broker channel “always will be” an important channel for the Commonwealth Bank, CEO Matt Comyn has said following the release of the bank’s full-year results, in which a sharp increase in broker-originated home loans was reported.

The Commonwealth Bank of Australia (CBA) has released its full-year results for the 2019 financial year (FY19), recording home lending growth of 3.7 per cent, above system growth of 3.4 per cent.

When including its subsidiary Bankwest, CBA’s total home loan portfolio grew $16 billion from $451 billion in FY18 to $467 billion.

On a standalone basis (excluding Bankwest), CBA’s portfolio grew $14 billion from $381 billion to $395 billion.  


A large portion of CBA group’s home lending growth came via the broker channel, with the third party’s share of CBA’s mortgage flows up 7 percentage points, increasing from 41 per cent in FY18 to 48 per cent.

In total, broker-originated loans made up 46 per cent of the group’s overall home loan portfolio, up from 45 per cent in the previous corresponding period.

Speaking to The Adviser following the release of the FY19 results, CBA CEO Matt Comyn attributed growth in broker-originated home lending to changes in consumer preferences and a concerted effort by CBA to optimise its service offering to the third-party channel.  

“If you look at the overall growth in that market, clearly many customers are preferring to go through mortgage brokers,” he said.

“[We also] put on extra people in our operations and risk areas to make sure we had a very consistent speed to decision and turnaround times.

“[As a result of] changes in and around responsible lending and expense verification, some of the operational turnaround times for some of the other institutions have increased. That’s really enabled us to perform well in this particular period (FY19).”

Further, when asked to shed light on CBA’s long-term plans for the broker channel, Mr Comyn told The Adviser that the bank would remain committed to the industry.  

“The mortgage broker channel has been and always will be a very important channel for us in this result, and historically,” he said.

“We’re very much committed to providing and servicing our customers through that channel.”

Mr Comyn’s commitment to the channel was called into question following the final round of hearings of the banking royal commission, in which he expressed support for the scrapping of the commission-based remuneration and backed the introduction of a fees-for-service model.

However, CBA remains on track to proceed with its plans to demerge from broking subsidiary Aussie Home Loans and sell its stake in Mortgage Choice.  

When asked to provide an update on the progress of CBA’s demerger plans, Mr Comyn said: “We’re still committed to the exit of mortgage broking and [superannuation] platform businesses. 

“I don’t have any greater specificity at this point in time in terms of timing, but we will still look to exit that business and our stake in Mortgage Choice.”

Mortgage portfolio breakdown

In its FY19 report, CBA recorded a slight increase in the portion of new loans approved for owner-occupiers, up from 70 per cent to 71 per cent, coinciding with a decline in the share of investor loans approved (28 per cent).

On a whole, owner-occupied loans made up 66 per cent of the group’s overall mortgage book as at 30 June 2019, up from 65 per cent, while investor loans totalled 31 per cent of the portfolio, down from 32 per cent.

The share of new interest-only loans approved over FY19 also fell modestly, from 23 per cent in FY18 to 21 per cent, and to 22 per cent of the group’s overall portfolio.

CBA’s share of the home loan market remained stable at 24.4 per cent.

Business lending and deposit growth was also reported by CBA, up 4 per cent and 2 per cent, respectively.

Financial performance

CBA has reported a cash net profit after tax of $8.49 billion, down $0.4 billion (4.7 per cent) on FY18 ($8.88 billion).

The profit slide was driven by a 2.5 per cent increase in operating expenses, which included a $996-million spike in customer remediation costs, taking its total remediation spend to $2.17 billion.

CBA also flagged elevated risk and compliance spend, wage inflation and IT costs as contributing to an increase in overall operating expenses.

The group passed on a fully franked dividend of $4.31 to its shareholders, flat when compared to FY18.

Further, a 2 per cent decline in operating income was also reported, with above-system lending growth offset by a decline in CBA’s net interest margin, customer fee removals and reductions, and the impact of weather events.

CBA’s net interest margin declined by 5 basis points, from 2.15 per cent to 2.10 per cent, which, according to CBA, partly reflected the impact of mortgage customers switching from interest-only to principal and interest, variable to fixed, and investor to owner-occupied home loans (-2 bps), as well as increased competition (-2 bps), offset by pricing (+4 bps).

[Related: Macquarie’s mortgage growth doubles in tandem with broker share]

matt comyn ta

Charbel Kadib


Charbel Kadib is the news editor on The Adviser and Mortgage Business.

Before joining the team in 2017, Charbel completed internships with public relations agency Fifty Acres, and the Department of Communications and the Arts.

Email Charbel on: [email protected]

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