Regional bank takes aim at majors

Australia’s largest regional lender is going after a bigger slice of the residential mortgage market with a renewed focus on third-party distribution.

Speaking to Mortgage Business, Suncorp Bank head of intermediaries, Steve Degetto, said the bank’s primary focus is being seen as a genuine alternative to the majors.

“We want to send the message that we are absolutely open for business,” Mr Degetto said.

“We want to fill that mantle of being the genuine alternative to brokers at the busiest time of the year,” he said.

In the 12 months to 30 June, Suncorp managed to reduce its non-performing loans by 18 per cent, helping the bank deliver an after-tax profit of $228 million.

The lender’s net interest margin increased from 1.64 per cent to 1.72 per cent in the year to 30 June.

Residential mortgages now account for 78 per cent of the regional bank’s lending portfolio, with commercial and SME lending contributing 12 per cent and agricultural lending contributing nine per cent.

A highly competitive mortgage market and cheaper funding have driven rates lower in recent months, but Suncorp is looking beyond price to grab market share.

“Customers are more informed than ever before, brokers are looking for a point of difference and lenders on occasion will pull the big levers, one of which is price,” Mr Degetto said.

“We are looking to build longer-term relationships with brokers, longer-term relationships with customers, and for us it is really the start of a campaign to position ourselves as that genuine alternative.”

In a highly competitive market where products, prices and commissions are becoming increasingly similar, the one point of difference for brokers is quality support and fast approvals for their clients, according to Deloitte partner, financial services, James Hickey.

“From my work across the broker market it is interesting how brokers will have their three to four lenders because they know that product, they know the processes, they have a relationship with the BDMs and can get quick turnaround times for the borrower around approvals,” Mr Hickey said.

“In many cases that is not the lender that is offering the most commission,” he said. “It is not the lender who is offering the biggest volume bonus.”

Suncorp’s Mr Degetto observed how brokers have become increasingly professional in recent years, placing customer needs ahead of commissions by pushing lenders for better service, rather than higher commissions.

“I have been in the third-party space for 15 years and the message brokers consistently send is if the product or deal is not right for a customer, they won’t put it to a lender,” he said.

“Commissions are absolutely secondary to looking after a customer’s best interests.”

Suncorp sees the continued growth in the broker channel as a testament to the high standards of customer service and the high level of professionalism.

 

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