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Although one credit union has announced plans to seek a back-door entry into the third-party channel, not all lenders are sold on the value of brokers.
News broke yesterday that Perth-based Unicredit had initiated merger talks with Teachers Mutual Bank. However, QT Mutual Bank is one of the dwindling number of lenders that see greater value in remaining outside the third-party channel.
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QT Mutual Bank chief executive Steve Targett said too many lenders are “using brokers to capture marginal profitability”, which is something they may regret in an economic downturn.
“Rather than use brokers for marginal growth, a number of institutions – particularly mutuals – would be better off merging to create sustainable businesses with some scale,” he told The Adviser.
Mr Targett said QT Mutual’s longer-term success depended on maintaining direct relationships with its members and meeting their product and service needs.
“We don’t like the economics of broker-introduced business, particularly due to costs associated with commission payments and administration supporting broker relationships. And, at our size, we would risk seeing marginal business from brokers,” he said.
Mr Targett said the Brisbane-based lender regularly reviews its position regarding brokers at board and executive level.
According to APRA’s latest banking statistics, HSBC has the largest mortgage volumes of all the lenders outside the third-party channel.
HSBC posted mortgage volumes of $8.8 billion in November 2014 – a 4.2 per cent increase on the previous year.
Next came Beyond Bank, which rose 3.2 per cent to $3.3 billion, followed by Bankmecu, which rose 7.8 per cent to $2.2 billion.
Victoria Teachers Mutual Bank grew 4.5 per cent to $1.4 billion; Defence Bank grew 13.9 per cent to $1.1 billion; and QT Mutual Bank grew 7.2 per cent to $1.1 billion.
The number of lenders servicing the third-party channel increased late last year with the arrival of Bank of Sydney and Bank of China.
The Adviser revealed last month that several third-party banks had been holding discussions with lenders that are investigating moving into the broker channel.
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