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The third-party channel originated 80 per cent of the non-major bank’s home loans in the financial year 2023, an increase on last year.
Suncorp Bank has reported an upswing in its home lending activities, driven by a increase in broker-originated loans during the financial year ended June 2023 (FY23).
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The full financial results revealed that there was a 9.1 per cent ($4.6 billion) increase in Suncorp Bank’s home loan book, propelling it to $54.8 billion.
This marked a recovery from the 0.9 per cent decline experienced during FY21 and maintained the momentum established with the 9 per cent growth in FY22.
Despite a slightly slower pace of home lending activity in the latter part of the financial year, Suncorp Bank remained steadfast in its commitment to striking a balance between growth and margin outcomes.
Chief executive Steve Johnston attributed the bank’s consistent growth in home lending to “improved broker and customer experiences”.
Suncorp Bank’s investment in the broker channel yielded results, as the third-party channel contributed to 80 percent of the bank’s total home lending originations in the year.
This marked an increase from the previous financial year’s 76 per cent.
Overall, brokers have originated 74 per cent of the bank’s total mortgage portfolio, up from 70 per cent in FY22.
While the Queensland-based lender still has a strong presence in its home state of Queensland (with 42 per cent of its book from this state) Suncorp Bank highlighted its growing broker presence has helped it grow its home lending portfolio in other states, particularly NSW (30 per cent), Victoria (15 per cent), and Western Australia (8 per cent).
The results also noted the bank’s continued investment in digital banking and AI solutions to enhance customer experiences and improve process for the third-party channel.
It came after the bank’s nationwide roll-out of digital connectivity and the introduction of an instant pricing tool on its broker portal.
Suncorp Bank also reported its steps toward removing cashback offers and increasing back-book retention hurdles, to improve its overall lending portfolio quality.
Owner-occupier lending accounted for 69 per cent of the bank’s originations in FY23, down from 70 per cent in FY22.
The surge in interest rates throughout the year prompted a decline in fixed-rate originations, accounting for a mere 3 per cent of new loans. Overall fixed-rate mortgages make up about a fifth of the bank’s book.
This sharp decrease in new fixed-rate loans compared to the previous year’s 36 per cent, reflecting the impact of the changing interest rate landscape.
The bank reported a reduction in loans with a debt-to-income (DTI) ratio greater than six times, which comprised just 1 per cent of originations, while new loans above 80 per cent LVR represented only 7 per cent of originated loans amid tight serviceability constraints and lending requirements.
Business lending also rose over the year, with total business lending increasing by 5.9 per cent to reach $12.4 billion.
While the SME portfolio experienced a slight contraction due to operational changes and a competitive recruitment market, the agribusiness sector demonstrated resilience by growing 5.2 per cent to reach $4.5 billion.
Overall, Suncorp Bank saw its margins increase by 27.7 per cent, marking $470 million.
Despite the challenging backdrop of increasing debt amid rising interest rates, mortgage arrears past 90 days remained relatively flat at 0.42 per cent of loans, which Suncorp said reflected the bank’s risk management practices.
ANZ-Suncorp merger ‘disappointing’
Following the ACCC’s decision to not grant merger authorisation, Suncorp Bank reaffirmed its commitment to supporting ANZ through the merger authorisation process.
“We are obviously disappointed with the ACCC’s decision to deny authorisation,” Mr Johnston said.
He added that the bank “maintain[s] the view that the proposed sale is in the best interests of our customers, shareholders and employees and that it will deliver public benefits for Queensland and the nation”.
“In our view, the deal can achieve these objectives without adversely affecting the competitive dynamics in the markets in which we operate,” Mr Johnston said.
“The evidence we have provided to support our views on these matters is contained on the public register and will ultimately be considered by the Tribunal.
“While we have only had a couple of days to review the ACCC determination, we’ve seen nothing that has changed our view on these matters or our level of confidence that the deal will ultimately be approved.”
If the Tribunal overturns the ACCC’s decision, completion of the sale is anticipated in the middle of the 2024 calendar year, subject to regulatory and government approvals.
[Related: ANZ and Suncorp to ask Tribunal to review merger denial]
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