Brokers at Tasmanian-based bank MyState has grown the number of broker originated loans by 40% during the 2017 financial year, bringing in 73% of all home loans through the third party channel.
This figure comes from the bank’s yearly financial results released on Friday (18 August) which also reported a increase of 11.3% in MyState’s residential loan book bringing the total book to $4.08bn – 1.6 times higher than the industry average. The bank also saw $1.68bn in home loan applications and $1.19bn in home loan settlements during FY17.
“Most of the growth in our book is originated through the broker network,” said CEO & managing director Melos Sulicich
during the investor presentation. “The reason for that is that we’ve got quite mature mortgage books for our branch networks in Tasmania and Central Queensland. They’re not high growth areas.”
This means that most of the growth at MyState comes from brokers in other regions, he added.
This can be seen through the bank’s state and territory breakdown where 50.5% of the bank’s loan book originates outside of Tasmania where it is located. New South Wales is MyState’s second largest consumer base at 18.5%, with the bank growing this share from 11.5% in June 2016.
“The key to our future growth is through broker origination on the Eastern Seaboard,” Sulicich said.
The bank experienced 22% growth in its <80% LVR portfolio, bringing the total number of these low risk loans to $3.05bn (or 74.8% of the total loan book). It also reduced its portfolio of loans with greater than 80% LVR by 11%, a strategy which saw the net interest margin decrease by 20 basis points to 1.93%.
“We’ve always had a relatively low LVR book. All of our growth in the financial year that we’re talking about now has been in below 80% LVR owner occupied principal and interest loans. From a risk perspective, it’s a very safe product segment,” Sulicich said.
Investor loans, including reclassification of the back book during FY17, made up 21% of the total loan book while interest only loans made up 24%.
“We’re now working internally with our broker partners and our branch networks to ensure that we’re within the APRA 10% growth cap. It does make running these businesses much more nuanced than they might have been in the past,” Sulicich said.
Looking at the quality of the loan book, 30-day arrears were down 19 basis points to 0.51% while 90+ day arrears now sit at 0.28% – below benchmarks set for both major and regional banks.
Finally, the bank’s statutory net profit after tax was $30.1m for FY17, a decrease of 3.2% from the prior year’s profit of $31.1m.
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