The group’s newly launched digital bank, Hiver, is looking to roll out loan products to the broker channel in the coming weeks.
Hiver made its debut as a new bank under Teachers Mutual Bank Ltd with its app launch in June, which offered a savings product and a 1 per cent cashback scheme on essential purposes.
Teachers Mutual chief executive Steve James told The Adviser that it is set to soon launch its loan products, which will also make their way to the broker channel.
“I think we’re aiming for the end of October, early November, to go out to the broker channel at this early stage,” Mr James said.
“Hiver was launched with a whole range of new savings products and the loan products were designed to start from October, November, this year. That’s when they’ll start and hopefully that’s when we’ll be using the broker channel as well.”
Hiver will serve a dual purpose for its parent group – allowing it to offer a digital bank for younger users and to test out and finesse new products, systems and technologies, before introducing them to Teachers Mutuals’ other banking brands.
Teachers Mutual has plans to take learnings from Hiver across to its four other brands in 2022.
Brokers are key to the group’s overall strategy, the CEO added.
“Even recently, with APRA increasing the buffer rates and that – we heavily rely on the third party, or brokers, to bring our members loans,” Mr James said.
“We’ve got members all over Australia, of course there’s firefighters and teachers and nurses and hospitals all over, in regional and city areas. So it’s important that the brokers play a big part of that.”
Home loans up by 20.1%
Teachers Mutual also released its 2021 financial year results on Thursday (14 October), revealing its home loan assets had grown by 20.1 per cent over the period, to $7.7 billion.
The broker channel had represented 64.1 per cent of new loans, while 35.9 per cent had been sourced directly.
Mr James commented the influx had jumped considerably from the year before, which had seen around a 2 per cent increase in loan assets.
He also reflected on the effects of the pandemic and the low rate environment, reporting it allowed Teachers Mutual to offer competitive rates in fixed loans.
The group’s four legacy brands, Teachers Mutual Bank, Firefighters Mutual Bank, Health Professionals Bank and UniBank, also had customer bases that mostly consisted of essential service workers.
“Most of them were fully employed during the period and they gathered quite a bit of savings during COVID, especially in lockdown. Our savings rates grew as well, so it was great to be able to lend strongly during that period,” Mr James said.
“I put it down to low interest rates, and people had more time to think about where they were going, whether they were going to move home or do the renovations on their home going forward and it was a good time for people who were fully employed during that period.”
Chief financial officer Glenn Sargeant also explained house prices had been under some pressure at the beginning of the crisis, which presented an opportunity for middle-income earners to enter the property market.
Teachers Mutual had streamlined its home loan portfolio in June, halving its products down to three offerings.
Mr Sargeant told The Adviser that the group had wanted to “rebalance the portfolio” away from its prior dependency on fixed rates, towards more of an uptake of its variable rate loans.
“We’ve certainly seen a greater demand and continued pickup in demand on variable rate products,” he said.
“I think brokers are starting to learn that you know we’ve got more to offer than fantastic fixed rates, that we are competitive, particularly after the changes that were made.”
Meanwhile, Teachers Mutual has edged closer to wrapping its merger with Pulse Credit Union, which is expected to close in November.
The merger will be its second for the year, following its deal with Firefighters Credit Co-operative earlier in April.
As a result of the transactions, Teachers Mutual will have gained around 9,000 members according to Mr James, 3,000 from Firefighters Credit Co-operative and 6,000 from Pulse – contributing to its total 221,000-odd member base.
During FY21, 10,000 members joined Teachers Mutual, with around a third coming from Victoria following the Firefighters deal.
Mr James also explained the mergers allowed for geographical diversification for the mostly NSW-centred group.
“It builds relationships with firefighters, and with the unions and various bodies in Victoria, as we move forward and develop our Firefighters brand and of course, with Pulse, half the membership’s probably university, so half will go to UniBank and half will go to Health Professionals Bank,” he said.
Mr Sargeant signalled that the bank is actively considering other potential merger partners moving forward.
“Banking is a scale game,” he stated.
“There’s certainly things that you need to manage going forward and size does help that,” he said, nodding to technology and compliance costs.
Looking at its other results, Teachers Mutual recorded a net profit of $28.1 million for the year.
It had gained $1.2 billion in customer deposits, up to a total of $7.9 billion.
[Related: Non-bank turnarounds starting to slow]