A rising net profit and growing home loan market share can be linked to engagement with the broker channel
A rising net profit and growing home loan market share can be linked to engagement with the broker channel
ANZ’s full-year profit has risen to $6.938bn, a result that could benefit the broker channel.
Although falling slightly short of expectations, ANZ’s profits increased 18%, whilst the major bank’s market share of home loans rose to 15.7%.
Crucially, the proportion of broker-originated loans at ANZ also rose, reaching 56% over the last 12 months. This is substantially above the portfolio average in 2016 of 49%.
“We’ve always been a supporter of the broker channel because we know that customers really like it,” ANZ CEO Shayne Elliot told Australian Broker magazine. “Look, the customer’s preference for brokers has just increased over time, every year after year. If anything, I see that continuing to be the case.”
ANZ’ investor presentation also cited ‘more third-party advice’ as part of its ‘Assumptions underlying new strategy’.
With major banks under pressure by some shareholders to reduce their reliance on the broker channel, ANZ’s positive result demonstrates the benefits of working with third parties.
Investor lending and arrears
ANZ’s results suggest reasons why it’s been able to increase its business with brokers.
Most surprisingly, the proportion of investor lending at ANZ only saw a small fall. 32% of loans in the last 12 months were investor loans, bringing the overall proportion down from 34% to 33%. This compares with other major banks having to effectively pull out of investor lending for short periods of time.
Interest-only lending has seen a sharper fall, accounting for 27% of lending in the last 12 months, with the current figure likely to be lower given APRA only introduced its speed cap earlier this year.
Asked by Australian Broker, CEO Elliott admitted broker loans were more likely to be in arrears but noted that “people getting into difficulty – those ratios – they’re slightly, a little bit worse than the average but it’s really minor – says it’s because people are attracted to brokers.”
In comparison with CBA
An increase of broker reliance at ANZ stands in contrast to the approach at CBA.
Earlier this year CBA announced that the proportion of business written by brokers had fallen for the first time since 2012. UBS analyst Jonathan Mott – who wrote the recent report on ‘liar loans’ – said the move was “important from a profitability perspective”.
The two banks are quite different, as ANZ’s Elliott noted; ANZ has half the number of branches and thus more reason to use brokers. ANZ is also better positioned to lend to investors, having been less heavily represented in this type of lending over recent years and thus having more room to grow, according to the JP Morgan Mortgage Industry Report.
ANZ’s full-year profit has risen to $6.938bn, a result that could benefit the broker channel.
Although falling slightly short of expectations, ANZ’s profits increased 18%, whilst the major bank’s market share of home loans rose to 15.7%.
Crucially, the proportion of broker-originated loans at ANZ also rose, reaching 56% over the last 12 months. This is substantially above the portfolio average in 2016 of 49%.
“We’ve always been a supporter of the broker channel because we know that customers really like it,” ANZ CEO Shayne Elliot told Australian Broker magazine. “Look, the customer’s preference for brokers has just increased over time, every year after year. If anything, I see that continuing to be the case.”
ANZ’ investor presentation also cited ‘more third-party advice’ as part of its ‘Assumptions underlying new strategy’.
With major banks under pressure by some shareholders to reduce their reliance on the broker channel, ANZ’s positive result demonstrates the benefits of working with third parties.
Investor lending and arrears
ANZ’s results suggest reasons why it’s been able to increase its business with brokers.
Most surprisingly, the proportion of investor lending at ANZ only saw a small fall. 32% of loans in the last 12 months were investor loans, bringing the overall proportion down from 34% to 33%. This compares with other major banks having to effectively pull out of investor lending for short periods of time.
Interest-only lending has seen a sharper fall, accounting for 27% of lending in the last 12 months, with the current figure likely to be lower given APRA only introduced its speed cap earlier this year.
Asked by Australian Broker, CEO Elliott admitted broker loans were more likely to be in arrears but noted that “people getting into difficulty – those ratios – they’re slightly, a little bit worse than the average but it’s really minor – says it’s because people are attracted to brokers.”
In comparison with CBA
An increase of broker reliance at ANZ stands in contrast to the approach at CBA.
Earlier this year CBA announced that the proportion of business written by brokers had fallen for the first time since 2012. UBS analyst Jonathan Mott – who wrote the recent report on ‘liar loans’ – said the move was “important from a profitability perspective”.
The two banks are quite different, as ANZ’s Elliott noted; ANZ has half the number of branches and thus more reason to use brokers. ANZ is also better positioned to lend to investors, having been less heavily represented in this type of lending over recent years and thus having more room to grow, according to the JP Morgan Mortgage Industry Report.
