A challenger bank that sees 90 per cent of its mortgages written through the third-party channel is bucking the trend among non-majors by consistently growing its mortgage market share.
The non-majors have been smashed by the big four in recent months, losing significant share across a number of key markets. The latest AFG Competition Index found that the non-majors collectively accounted for just 22.1 per cent of all fixed rate mortgages in May, down from 53.8 per cent a year prior.
Suncorp was the hardest hit in recent months with the bank’s fixed rate market share tumbling from 20.6 per cent in March to 4.8 per cent in May.
However, ING Direct has managed to boost its share of broker-originated mortgages in every loan category over the quarter, which saw its total market share grow from 1.5 per cent in February to 4.3 per cent in May.
The bank was the only non-major to lift its share of fixed rate mortgages over the period, from 1.6 per cent in February to 5.0 per cent in May, while its share of investor loans grew from 0.3 per cent to 0.7 per cent.
ING Direct has also proven its strength in the first home buyer market, lifting its share from 0.7 per cent in February to 4.4 per cent in May.
Meanwhile, in the highly competitive refinancing space, the foreign-owned lender ramped up its share from 2.1 per cent to 6.2 per cent over the quarter. ING Direct now holds the lion’s share of refinance loans among the non-majors on AFG’s panel.
The bank’s total mortgage volumes grew by 2.6 per cent to $39.8 billion in the 2015 calendar year, with its branded mortgage volumes experiencing a 10.8 per cent increase.
Mark Woolnough, head of third-party distribution at ING Direct, said much of the mortgage growth was due to its broker network.
“Mortgage brokers are absolutely critical to our business, responsible for nine out of every 10 ING Direct mortgages,” Mr Woolnough said.
“We’ve been working with brokers for more than 16 years, and we continue to nurture these relationships with great value-driven products and fair and transparent remuneration.
“I’m confident the broking channel will continue to grow beyond its current 52 per cent market share, as its role in driving consumer choice and value is increasingly recognised across the industry.”
ING Direct’s focus on diversifying its loan portfolio has also paid off, with the bank increasing its commercial portfolio by more than 17 per cent last year.
“The appetite for commercial property is definitely growing, and we see a huge opportunity not only for our business, but for investors and for brokers, [by] diversifying risk and sustainably building business,” Mr Woolnough said.
The bank posted a net profit after tax of $314.7 million for the 12 months to 31 December 2015 – a six per cent increase on the previous year.
The bank’s former CEO, Vaughn Richtor, who stepped down earlier this month, said he was immensely proud of what ING Direct had achieved since its launch in 1999.
“Our business model challenged how banking was done and while some doubted we would succeed, the provision of value for money products and exceptional customer service has proved a winning formula,” Mr Richtor said.
“Creating the right culture in an organisation is the best way of ensuring the business does the right thing by the customer.”
Uday Sareen officially took over as chief executive of ING Direct Australia on 1 June.
[Related: NAB changes home loan policy]