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CBA’s chief executive has highlighted the importance of brokers in supporting its customer base.
Speaking remotely (due to a bout of COVID-19) at the House of Representatives standing committee on economics for its review of Australia’s four major banks yesterday (13 July), Commonwealth Bank of Australia (CBA) CEO Matt Comyn emphasised broker importance to the lender's customers.
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"We have the largest proprietary, or bank employee, lenders who have direct relationships with our customers, but still mortgage brokers are a really important part of being able to support our customer base.
"At Bankwest, which is a brand we own, a much higher proportion of customers would be introduced by brokers."*
Mr Comyn continued: "We also have a direct digital proposition, known as Unloan, which is direct to customers. You may have heard it advertised. It has a low rate and also a rate that decreases over time. I'd make the same observation as brokers, and I know from our own lenders that, firstly, it's a very competitive market and, secondly, people want to do a good job for their customers. They want to retain their customers. They're also measured, certainly in the case of our lenders, around advocacy from their customers. Therefore, there's a degree of accountability to make sure they're providing not only a high quality of service but also making sure that their customers are on a competitive rate."
The CBA CEO further acknowledged that brokers are a “significant and important part” of the home buying market, facilitating approximately 70 per cent of home loans, with around 40 per cent of brokers facilitating home loans for the major bank.
According to CBA group’s financial results for the half year ended 31 December 2022 (1H23), around 49 per cent of the group’s new mortgages were originated by the broker channel (holding firm on the same period the year prior), with the third-party channel responsible for 47 per cent of the bank’s total home loan portfolio.
Observing CBA alone, however, this dropped to 42 per cent, the same proportion as 1H22.
Last month, the major bank confirmed that Adam Croucher, the general manager for third-party banking at the Commonwealth Bank of Australia (CBA), had left the bank after nearly 19 years of service.
Razia Khan, the general manager for acquisition and retention — home buying, has stepped into the general manager, third-party banking role in an acting capacity while a search for a permanent successor is undertaken.
Mortgage stress drivers
During the hearing, Mr Comyn also spoke on the biggest reasons behind mortgage stress.
He stated that unemployment is one of the three main drivers of mortgage stress across lending books.
“By far the biggest increase in terms of the reason why someone will be unable to continue making repayments is a change in their employment circumstances,” Mr Comyn said.
Mr Comyn further stated that beyond unemployment, the other contributors to mortgage stress tend to be serious illnesses and a change of familial situations or relationships.
“Clearly with the employment market remaining very strong, a vast majority; almost all of our customers continue to work - and they’re just feeling pressure right across the board,” Mr Comyn added.
“Not just for rising rates, but also as that’s flowed through into higher energy prices, higher groceries, and we do think that that will continue to weigh on consumer consumption expenditure over the course of the year.”
He added that with the rapid change in the cash rate and rental increases, “approximately two-thirds of households are clearly feeling more pressure on household budgets”.
*This story was updated on 16 November to update Matt Comyn's comments regarding broker support. The original version of this story suggested that brokers were "really important" to Bankwest. The story has been updated to reflect Mr Comyn's comments as per Hansard.
[RELATED: Broker channel dominates banks’ mortgage business]
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