CBA reveals mortgage distribution plans

The Commonwealth Bank of Australia has revealed details of its home loan distribution strategy, including the position of Aussie Home Loans.

CBA noted in its half-yearly results this week that its home lending volumes had slowed in the broker and investor segments over the second half of 2014.

At a question and answer session following the bank’s profit announcement, CBA chief executive Ian Narev said that while the lender has an appetite for all channels, various parts of its proprietary channel are “going really well”.

“We have got an investment we really like in Aussie Home Loans,” Mr Narev said.

CBA group executive of retail banking services Matt Comyn then explained that the lender is “deliberately the least dependent on the broker channel” relative to its peers.

He noted that CBA is monitoring the broker channel “very closely” since it is currently outpacing direct lending as an industry channel.

“We haven't participated to the same extent in the broker channel and particularly in investor, primarily in New South Wales and Victoria,” Mr Comyn said.

“A number of different reasons: one of which is there is much greater price sensitivity in investor so we are very focused on the divisional NIM [net interest margin] and managing volume trade-offs,” he said.

“So that has been sort of the real drivers of that, included in our broker disclosures, as well as the Aussie relationship, including the Aussie white label.”

Mr Comyn noted that CBA has a white-labelling arrangement with Aussie Home Loans.

“So we are looking to basically deliver consistent growth heavily focused on proprietary,” he said.

“Broker will always be an important part of our business, but we are focusing primarily on our proprietary channel.”

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