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An Australian regional bank has revealed its plans to significantly grow its mortgage distribution through the third-party channel.
Announcing its full year profit results yesterday, Bank of Queensland (BOQ) said that its presence in the broker channel is already increasing, with BDMs supporting more than 2,500 accredited brokers in Australia.
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While broker volumes generated the bulk of the growth in BOQ’s retail bank and represented 15 per cent of housing settlements in 2015, growth momentum in the third-party channel was lower than the first half. However, brokers originated 23 per cent of the bank’s total mortgage settlements in August this year.
Yesterday’s trading update revealed that BOQ is looking to increase its third-party presence to an anticipated 4,000 brokers by the end of the 2016 financial year – a 60 per cent growth target.
“Broker channel expansion accelerated in 2015 with the total accredited more than doubling to 2,506,” BOQ chief executive Jon Sutton said.
The majority of these are based outside of Queensland (83 per cent).
“The second half of the 2015 financial year saw sizeable inroads into the Queensland broker market to leverage our strong brand appeal in our home state and this grew to 420 brokers by year end.”
“The number of broker aggregators was also widened with the inclusion of Finsure, Loan Market and Beagle Finance,” he said.
BOQ reported a 22 per cent increase in its statutory profit after tax to $318 million. After-tax cash earnings increased 19 per cent on the previous financial year, with the bank putting the positive result down to a higher net interest margin, a strong full year contribution from BOQ Specialist and further improvement in impairment expense.
Mr Sutton said he was pleased the bank had delivered another record result in challenging market conditions.
“BOQ has now delivered record results for five successive halves, a significant achievement in an environment of low growth and changing regulations.
“Though we have more work to do, particularly around returning to higher levels of asset growth, most of our key financial metrics are moving in the right direction.
“Overall we remain a bank that has come a long way in recent years and we are confident that we are well positioned for sustainable growth into the future,” he said.
Net interest margin for the full year was 1.97 per cent, up 15 basis points on the prior year due largely to the higher margin BOQ Specialist business.
Mr Sutton said there are many factors driving the outlook for margins in the year ahead given the changing regulatory environment, with banks positioning for global industry change under the Basel IV framework expected to be introduced in the coming years.
“The potential reduction in the significant capital advantage enjoyed by advanced accredited banks should be a positive to BOQ’s competitive position and relative return performance,” he said.
