BNZ banks on brokers

BNZ has reported that its first-half net profit jumped 12.2%, boosted, partly by increased business and housing lending, and mortgage advisers played an important role in this result.

Thursday, May 2nd 2019, 12:32PM

The bank, yesterday, reported a $550 million net profit for the six months ended March, up from $490 million in the same six months a year earlier.

BNZ has increased its share of the housing loan market by 1.2 times the market growth rate and helped more than 7,500 New Zealanders realise their home ownership goals, with 2,500 of those being first home buyers.

“Our housing loan growth was particularly pleasing as we know home ownership plays a key role in New Zealanders’ sense of on-going financial wellbeing and people are looking to BNZ to help take this important step,” BNZ chief executive Angie Mentis says.

In this period 25% of BNZ's loans came from from mortgage advisers and overall around 17% of its book of lending has been originated from advisers.

Mentis estimates, on average around 35% of home loans in New Zealand are originated through the mortgage adviser channel, but BNZ didn't want to get to that level.

She is happy with BNZ's re-entry into the mortgage adviser market and there was "room to grow", but it didn't want to get to the level other banks.

Mentis said BNZ was very supportive of its proprietary channels which includes its branches and mobile managers. Mortgage advisers are complimentary, she said, and they offer customers choice.

"We are supportive of anything giving our customers choice."

BNZ uses a trail commission model for mortgage advisers and this is likely to be reviewed in light of the results of various commissions and reports. Mentis noted there are different remuneration models around the world and she noted in the Netherlands customers pay for advice. She didn't know if it was a model for New Zealand but we "need to have a look".

Owner-occupied mortgages account for 65.4% of BNZ’s mortgage book, up from 63.8% a year earlier, and that interest-only mortgages are down from 22.8% a year earlier to 21.4% of its book.

Customer focus

“We have purposefully realigned the business to deliver improved customer outcomes and we’re encouraged by our progress to date and excited about the future,” BNZ chief executive Angie Mentis said in a statement.

Talking about “customer outcomes” has become fashionable in banking circles since the findings of Australia’s royal commission into financial services. Mentis says her bank has provided “a comprehensive response” to the joint review of New Zealand bank culture and conduct by the Reserve Bank and Financial Markets Authority.

“Our response highlighted BNZ’s focus and resolve on conduct to do the best we can for our customers and outlines our plan to meet the increasing expectations of our customers and stakeholders,” Mentis says.

“Proactively fixing issues where we find them is key to delivering great customer outcomes and continuing to listen and proactively support New Zealanders is the right thing for BNZ to do,” she says.

Tags: BNZ