ABC Focuses On Turnaround Times Says CEO
Matt Comyn said the big bank had a “disciplined focus on turnaround times” but that it was “easier” to improve speed through the owner channel than through the broker.
Commonwealth Bank of Australia (CBA) CEO Matt Comyn on Wednesday (February 10) announced the big bank’s results for the first half of fiscal 2021 (1H21), revealing the bank had experienced strong lending growth . during the six month period.
Domestic mortgage loans rose 3% in the six months to December 31, 2020, 1.5 times the growth of the system.
Net mortgage loan growth for CBA (including subsidiary Bankwest) exceeded $ 13 billion to $ 498 billion as of December 31. The vast majority of the group’s mortgage portfolio ($ 423 billion) is held by CBA.
Fundings were up 23% from the same period in FY20, with new home loan funding at $ 65 billion.
According to Mr. Comyn, there were “record volumes” over the period, with December notably seeing strong mortgage growth (with balance growth of around $ 3 billion).
Mr Comyn noted that approvals also increased in the half, with home loan approvals increasing 32 percent from the same period last year. According to the bank, 179,000 mortgages were approved in the first half of fiscal year, up from 141,000 in the previous six months (and 136,000 in the first half of fiscal 20).
The CEO suggested that “a disciplined focus on business management and service levels has contributed to the increase in activity.”
Indeed, financial results show that lending decisions are now automated for about 65 percent of home loans going through the owner channel, often on the same day.
Following the publication of the results, the advisor asked Mr. Comyn if the bank plans to improve turnaround times in the broker channel, given the growing disparity between direct and third-party lead times.
For example, the results of Momentum Intelligence’s Broker Pulse survey revealed that brokers waited an average of 18 days for ABC to make an initial credit decision in January 2021.
Mr. Comyn told the Advisor: “You are absolutely right, the operational execution of fast decision-making is critical for clients, and in the third-party channel, for brokers.
“Our response to the initial decision was much better than this [18 days] for half, but we have seen a very large increase in requests, especially towards the end of December and January, so there may have been cases where there has been an increase at this level. From our perspective, however, we’re very committed to making sure we have really good turnaround times.
However, Mr. Comyn added that it was “a little easier” to increase decision speed from a proprietary perspective “because of the wealth of data we have on these clients”.
He continued, “From our perspective, it is important to enable our brokers to do business with us and to ensure that we provide competitive and leading decision making and turnaround time. And I know it’s an Angus focus [Sullivan], who leads retail banking and our third-party team. “
According to a recent update from the Mortgage & Finance Association of Australia (MFAA), some lenders have suggested that the reshuffle of brokerage requests was “a very important factor” for longer time frames while lenders “.
However, Mr Felton said earlier this year that he was “convinced” that the conflict between the channels was “alive and well”.
“[I]It seems obvious that at a time when resources are limited and volumes are flowing, it seems that brokerage channel SLAs are exploding and the industry seems to be staying fairly stable, ”he said.
However, the CEO of the MFAA said there had been “strong recognition of the problem” from several lenders, and that the Big Four banks had expressed “real and absolute concern” about the problem “and were working hard to resolve it. [it]”.
“[A]Four of the majors have told me their intention is to align processing times between first and third party channels, ”he said.
“This is a major recognition, which I found exceptionally encouraging and which is very important and fundamental for [the] the ability of the brokerage channel to be competitive in the future. “
Despite longer lead times reported through the broker channel, CBA’s half-year results show that an increasing share of its flows are coming from the broker channel.
In December 2020, 47% of the CBA Group’s mortgage portfolio (including Bankwest) was taken out through brokers, compared to 46% the previous year. In addition, 48 percent of new business came from the third-party channel.
Excluding Bankwest, brokerage loans represented 42% of ABC’s home loan portfolio and 44% of its new business in December 2020, up from 42% the year before.
[Related: ‘Clearly, there is a problem’: MFAA on turnarounds]
Annie Kane is editor-in-chief of The Adviser and Mortgage Business.
In addition to writing about the Australian brokerage industry, mortgage market, financial regulation, fintechs and the broader credit landscape – Annie is also the host of Elite Broker and In Focus podcasts and The Adviser Live webcasts. .