Bank distribution drives ANZ's mortgage growth
ANZ chief executive David Hisco explains why the bank has managed to continue to grow its residential lending book despite a competitve market environment and the Reserve Bank's LVR restrictions.
Thursday, May 1st 2014, 5:03PM 
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ANZ has continued to increase its share of the residential home loan market thanks to a growing branch network and success in Auckland and Christchurch.
In the six months to March 31 it has lifted its market share 22 basis points.
ANZ chief executive David Hisco says ANZ is winning the battle for new business in Auckland and Christchurch, writing 31% of all new loans in Auckland and 29% of all new loans in Christchurch.
Its branch network has seen the strongest growth in distribution at the expense of its mobile managers. Now half of all mortgages sales are through branches which previously account for 43% of sales.
Hisco attributes the growth in lending to a number of factors including making increased branch numbers, having more mortgage specialists within branches and giving branch staff discretion to approve applications.“People can wander into a branch and get an answer,” he says.
Mortgage brokers remained static as a distribution channel account for 29% of sales in the 12 months to March 31 last year and this year.
Hisco says brokers remain an important channel for the bank, but ANZ has no intention of changing its broker remuneration model.
There has been talk that one of the big banks will reintroduce trial commissions for brokers. Hisco said it isn’t ANZ.
“We haven’t even looked at it,” he said.
If trails were re-introduced ANZ won’t be first out of the block. “It’s not something I would be leading,” he said.
While ANZ does pay trail commissions in Australia, Hisco noted that there are many things the bank does in Australia that it doesn’t do in New Zealand.
Another of those was the launch of an offset product.
Hisco says they are not really appropriate in New Zealand. “No one has any spare money to put into an offset account.”
The latest results show that ANZ has been living well within the Reserve Bank’s lending restrictions with loans with an LVR of more than 80% making up around 5% of new lending.
Hisco said the restrictions had done their work.
While not categorically saying that they will go anytime soon he is clear that rising interest rates will be a much more effective tool for cooling the housing market.
“Nothing dampens home loans growth like rising interest rates.”
Results Recap
Six months to March 30
- Net profit after tax $853 million, up 31%
- Net interest income $1.37 billion, up 5%
- Net interest margin 2.48%, down 2 bps
- Cost to income ratio 41.5%, down 370 bpss
- Mortgage market share, up 22 bps
| « LVR rules could be loosened this month: Westpac | A week of the expected and unexpected » |
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ANZ - we live in your world
Yeah right!