Home loan applications and settlements more than doubled at MyState Bank in the past six months, with brokers driving the momentum.
Tasmania-headquartered banking group MyState released its results for the six months ending December 31, revealing that its statutory net profit after tax fell 2.4% year-on-year to a total of $16.6 million.
The bank’s bottom line had been hit by higher operating costs, due to increased investment in distribution staff, marketing and branding as it continued its multi-year growth strategy.
So far, MyState has been successful in gaining market share. During the six months, its overall loan book grew 10.6% to $6.1 billion, driven by an 11.4% increase in real estate loans to a total of $6 billion. .
Home loans had increased to three times the growth of the system during the period.
Applications soared 117% to $2.5 billion in home loans, while there were $1.4 billion in settlements, up 116% year-over-year.
The increase was driven by the broker channel, MyState chief executive and managing director Brett Morgan reported, with the bank’s differentiating factor being brokerage service and fast loan valuation times.
“For us, these are turnaround times. For over 12 months, we have always been two days away from the turnaround time for indicative approval,” Mr. Morgan told reporters on Friday (February 18).
“And the broker community, from my discussions with brokers, just wants that certainty so they can serve their clients as well.”
However, the latest Broker Pulse survey found that the average initial credit decision time in January for MyState was six business days.
During the semester, brokers accounted for approximately 85% of new home loans and approximately 80% of the portfolio.
Looking ahead, the bank’s game plan centers on brokers and their dominance in the home loan market, Mr Morgan told The Adviser.
MyState has made “significant investments” in the brokerage distribution team, with East Coast hires expected to increase its footprint.
“On the continent, our strategy is definitely broker distribution,” Morgan said.
Latest hires have included three additions to the broker relationship management team in Queensland, NSW, ACT and Northern Territory.
Indeed, the bank has managed to almost double its proportion of home loans in New South Wales over the past five years. In December 2021, 20% of MyState’s mortgage portfolio resided in New South Wales, up from 11.5% in June 2016.
Victoria held 17.7% of the bank’s mortgages, up from 17.7% in 2016, while Queensland soared to 20.3% from 16.2% previously.
The NT had remained somewhat constant at 0.2% compared to the 0.1% tranche held in 2016.
At the same time, the share of loan book declined in Tasmania (from 55.7% in 2016 to 38.3%), Western Australia (down to 1.6% from 2.5%) and in South Australia (sliding to 0.9% from 2.5%). the previous 1.2%.
MyState also ramped up its advertising, with a 90% year-over-year increase in marketing costs to $5.8 million in the half.
In Melbourne, where MyState’s marketing campaign is currently mainly focused, Mr Morgan reported that there had been a record number of customers joining the bank.
However, as a number of other banks have recently reported, competition has remained fierce in the realm of home loans.
Competitive pressures had reduced MyState’s net interest margin (NIM) by 17 basis points year-on-year, ending December at 1.7%.
Fixed-rate lending had also increased, from 24% of MyState home loans in the prior corresponding period to 34% in the past six months.
Mr Morgan stressed the importance of pricing, but he thinks the bank need not rush to the bottom.
“It’s part of the puzzle that brokers have to factor in the pricing service and all those things under the bid. We absolutely have to stay competitive,” he said.
“But at no time do we market leading rates because…it’s both a good proposition and a good experience and making sure customers know they can buy house when they want to buy a house.”
mr morgan has been running the bank for about four weeksafter having been director general of banking at the BNK.
[Related: Calls for brokers to assess lenders in survey]
Sarah Simpkins is the managing editor of Mortgage Business and The Adviser.
Previously, she reported on banking, financial services and wealth management for InvestorDaily and ifa.