Broker backflip as BoQ seeks profit turnaround

by Adam Smith29 Mar 2012

Bank of Queensland has tipped mortgage broker use as one of its key strategies in turning around a $91m first-half loss.

BoQ chief executive Stuart Grimshaw has tapped mortgage broker use as a short-term priority to revive the bank's struggling profits. In a presentation to investors, the bank called opening the mortgage broker channel "a quick win" to ramp up business.

The bank withdrew from the mortgage broker market in 2004, instead paying commissions to its owner-managers through its franchise model. While it still relied on brokers to source equipment finance, the bank claimed its own branch network would provide sufficient mortgage growth. Then-managing director David Liddy said in 2004 that the bank would focus on "ensuring we provide exceptional customer service through our own channels, rather than relying on third-party sales people".

"We are different from the major banks, which have a mature branch network and so achieve productivity gains through the broker channel. In our case, the broker-originated loans provide too low a yield to pursue as we move forward. In effect, we are growing sufficiently fast organically without the need for mortgage broker-generated loans," Liddy said.

In withdrawing from the channel, Liddy said the bank had made a "positive move" which he predicted would have a positive impact on profitability.

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  • by ozboy 29/03/2012 10:00:17 AM

    Well that's interesting Mr Liddy stated the broker business was unprofitable, then earlier this week BOQ flagged that they were reducing commissions paid to the branch owner managers. So the question that every broker will be asking is: "What is the commission plan BOQ will release? and can they handle the business?" Knowing quite a few insiders both BOQ and owner managers I can tell you the biggest hurdle they all deal with is the antiquated systems. We already have enough 2nd tier lenders who want the business but then can't handle it we don't really need another. Mind you I could be!

  • by Brent 29/03/2012 10:16:27 AM

    Look at the positive move it has had on their profitability now. They swing back into broker world again to we can save the day! I suspect there will be a lot of brokers that will be pretty hesitant to use them.

  • by Country Broker 29/03/2012 10:17:39 AM

    very intersting , why would a broker go back to them now when we have so many choices like ANZ, HOMESIDE, Bankwest and even the CBA and so on who are keen to see the buisness they write with the broker chanel increase,AND they all supported the broker chanel during the GFC fall out times. i for one will not be going near them.