‘We let down our broker partners’: ANZ CEO

Over the half, the bank saw $35 billion in Australian home loan flows, holding its Australian mortgage book firm at $278 billion (though it rose marginally from $278 billion in September 2021 to $278.4 billion by March 2022). 

It was down slightly on March 2021, when the loan balance and lending flows totalled $281 billion.

ANZ saw more than 82,000 home loan accounts opened in the half, up 18,000 on the same period in the prior year (but down 10,000 on the previous six month period).

The average loan size also rocketed up (in tandem with escalating house prices over the period), with the average new loan written by the bank in 1H22 being $458,000 – up $58,000 on the same period last year.

However, its market share dropped in the half (based on APRA stats), falling to 13.8 per cent of market (down from 14.4 per cent at the same time last year).

Indeed, APRA’s recent lending stats for March show that the big four bank experienced a 1 per cent or $82 million dip over the month of March 2022 across both its owner-occupied and investor housing loans, down to $260.5 billion.

Turnaround times improving, brokers coming back

While the major bank’s loan book continues to struggle to recover from its losses as a result of long delays in its processing times over the past few years, it has started to see the green shoots of recovery following a sizeable investment in processing resources.

The bank chief executive highlighted that it drove positive balance sheet momentum by increasing home loan processing capacity by 30 per cent, with assessment times “now in line” with major peers.

According to ANZ, the bank is now taking a median time of three days to reach initial decision for “simple” applications and a median of seven days for more complex files. 

However, it noted that this includes both broker and direct times, the former of which being subject to “relatively higher time to decision” than the proprietary channel.

According to CEO Shayne Elliott, the longer delays in broker channel can largely be explained by the fact that most broker-originated loans are new-to-bank customers (who therefore require more verification/checks than existing customers), as well as the fact that ANZ is “known through the broker community as the bank for self-employed people”.

Having a larger proportion of self-employed borrowers coming through the broker channel “inherently takes longer for [the bank] to verify [their] income because it’s likely to be more volatile”, he told The Adviser.

“It’s nothing more than that,” Mr Elliott said. “It’s really to do with the mix of business and our degree of understanding of the applicant.”

The longer turnaround times for the broker channel may account for the fact that its proportion of loans introduced by the third-party channel dropped over the year, with flows falling from just under 58 per cent in the year to 1H21 to 53 per cent in the year to 1H22. 

The last time the bank experienced a marked drop in broker popularity was in 2020, when long delays at the start of the pandemic resulted in a drop in broker flows to 49 per cent in 1H20.

‘Brokers looking for consistency of performance’

While addressing investors at the results meeting on Wednesday, CEO Shayne Elliott conceded that ANZ had “let down [its] broker partners in terms of our processing capabilities” and that brokers “weren’t really happy with [ANZ”, but suggested that sentiment is improving.

He said: “We’ve got a new team in there looking after those relationships, and we had dinner with the major aggregators ... four weeks ago.

“... Actually, the support we got was really positive and the feedback was: ANZ was the first to support the broker industry, and it’s always been with them, and it’s never treated them as a competitive threat. And they’ve not forgotten that. 

“They’re disappointed with us, but we have not burnt those relationships. And they basically said: ’We are there for you when you get your act together. We will be back.’ And we are starting to see early signs [of that].

“So, I think, from a relationship point of view. I’m sure there’ll be some of the fringes are not happy, but the core is pretty good. And we’re already starting to see some of that come back into the business.”

Maile Carnegie, ANZ’s new head of retail banking, added: “When you talk to the brokers … They are really looking to see consistency of performance. They’re now seeing [that] and they’re starting to send more flows our way.”

According to Ms Carnegie, while the flow of broker-lodged loans made up 53 per cent of all mortgages as at the end of March 2022, ANZ’s broker flow is currently “back up to about 58 per cent”.

“So, we’re seeing that volume come back in, we’re seeing support come back in,” she said.

When asked by The Adviser whether ANZ was looking to actively grow broker share, Mr Elliott said that while the bank doesn’t “target a number on broker flow” (instead seeking growth across all channels), he added: “We just want to make sure we have a decent offering.”

“The mix is sort of important. It’s interesting, but really what we want to see is all of them growing … but, to be accurate, the most recent data suggests we are back to that 58 per cent.”

He added: “We’re back. We’re back in market, we’re getting better all the time … it’s actually been pretty down close to two [days] for much of that period of time.”

[Related: ‘Give us a chance’: ANZ group head of retail asks brokers]