Brokers help drive growth for Great Southern Bank

Customer-owned lender Great Southern Bank (GSB) has released its annual results for the financial year ending June 2024, in which it issued $4.23 billion in new or additional lending to home buyers.

Over the year to June, the bank grew its total book to $16.9 billion, up from $16 billion at the end of FY23.

The vast majority of this ($16.3 billion) was for mortgages.

The lender told The Adviser that 78 per cent of its home loans came from the broker channel in FY24.

The flow of broker-lodged loans has been increasing in the three years since the credit union became a bank, having grown from 56 per cent in 2021.

Speaking to The Adviser earlier this month, GSB’s head of branches and broker Mathew Patterson said: “The dependency on broker is not going to stop anytime soon.

“We run a fairly tight panel, so we make sure that we can service our brokers and deliver on our promises. We think it’s a strategic advantage for us from a service element to keep broker numbers quite tight and focus on our service.

“We’re really pleased that in The Adviser’s Third-Party Lending Report, we are among the top-three banks for commitment to the channel. That, for me, was a super pleasing result, because it shows that it's just not time-to-yes, or rate, or price that brokers expect – it’s also having a supportive lender partner.”

First home buyer and investor lending on the up

The lender said that over the last financial year, it wrote 2.1 per cent of all first home buyer loans in Australia, issuing $1.32 billion to this cohort of borrowers. According to the bank’s figures, the average first home buyer borrowed $518,000 in FY24, an increase of over $25,000 (5.1 per cent) on FY23, as home prices continued to increase.

However, GSB has also revealed that its investor book has already increased dramatically over the year, with around 25 per cent of its new home loans being for investors. This is a 75 per cent increase in six months, according to the bank.

The volume of investor loans has been rising steadily over the recent months, with APRA statistics showing that GSB had around $2.8 billion of investor loans in June 2024, which rose to just over $2.9 billion in August 2024.

According to GSB, the increase in investor lending comes following “improvements” in its processes and policies, which include accepting negative gearing on applications, changing its policy to be more flexible for self-employed applicants, increasing rental income recognition to 90 per cent, and providing a dedicated team of credit assessors for complex applications.

It has also been growing its personal loans (including having written more than $4 million in green personal loans in the first year since launching, with particularly strong uptake for electric and hybrid vehicles) and credit card business in the past year, while its retail deposits grew by 4.7 per cent to $13.6 billion.

Over the year, the bank increased its active customer base by 3.4 per cent over the year, taking it to 414,000 customers.

However, like many other lenders, it flagged that arrears have been rising. There was a 6-basis point uptick in the bank’s 90-plus days home loan arrears over FY24, though the bank said its arrears rate remains “less than half of the overall industry average”.

First home buyer arrears rates are reportedly in line with the overall customer base.

Paul Lewis, managing director and CEO of Great Southern Bank, said: “Since rebranding as Great Southern Bank three years ago, we’ve comprehensively transformed our operations, become more efficient and more competitive.

“Our home lending decisions are being made faster than ever before. At the same time, the consistently high rates offered on our term deposits are setting benchmarks the biggest banks struggle to match.”

Great Southern Bank reported a group net profit after tax (NPAT) of $37.3 million, which it said was a reflection of its growing customer base, steady home loan growth, and effective cost management.

Small business and green loans in focus

Looking to the future, the lender is looking to grow its small-business offering, after it launched a new, digital-first banking proposition for small businesses.

Leveraging the proprietary platform and operational software provided by fintech and equity partner Constantinople, the bank is specifically targeting nano (sole traders) and microbusinesses (employing less than four people).

The Business app aims to provide small-business customers with “simple, intuitive, and integrated banking products all sitting on one digital platform”.

The bank said that its multi-year investment in technology and service improvements is delivering faster loan decisions, improved customer service, and industry-leading products and interest rates.

Patterson told The Adviser earlier this month: “Three years ago when we went through our rebrand, we made the decision to compete on purpose, and our purpose is helping all Australians own their own home.

“We have a particular slant towards first home buyers and we over-index that first home buyer space, and we’re proud to say that we do that. We do three times our natural market share in the first home buyer space and a lot of that we do through scheme lending; we’re a strong participant in the government schemes…

“First-time buyers are going to be crucial for us going forward. However, we can’t throw all our eggs in that first home buyer basket. So little while ago, probably about 12 months ago, we made some fundamental changes to our investor proposition, and now we’ve got a really good, strong foothold in the investor segment as well, and that’s helping us diversify.

“We’re also looking at a green home offer. While we have a green personal loan out in the market currently, the green home offer will come out this financial year.”

[Related: Great Southern Bank welcomes new chair]

Written by Annie Kane

Last Updated: 01 October 2024

Published: 01 October 2024