NAB branches most efficient at selling mortgages: Morgan Stanley

According to Morgan Stanley Research’s Roadmap to Branchtopia report, NAB had the strongest mortgage sales efficiency in the 2017 financial year (FY17), with $74 million in home loans settled per branch.

Morgan Stanley has said that NAB’s business bank and non-broker referrals helped drive the efficiency.  

“We think the business bank and non-broker referrals assisted with this,” the group said.

“But even if we assume [approximately] 30 per cent of sales were from the business bank and remove this from branch sales, NAB’s adjusted $52 million of mortgage sales per branch is ahead of peers, who also had some assistance from their business banks.”

Conversely, the research found that mortgage sales through ANZ’s branch network were the least efficient of the big four banks, with $35 million in home loans settled per branch in FY17.

According to Morgan Stanley, ANZ “relied more on mortgage brokers”, with broker-originated loans making up 51 per cent of its home loan flows in 2H17, compared to 34 per cent of NAB’s home loan flows over the same period.

Further, the research found that Commonwealth Bank drove the most internal mortgage flows in FY17, delivering $57 billion in home loans, ahead of NAB ($53 billion), Westpac ($43 billion) and ANZ ($23 billion).

Broker share of major bank flows rising

Moreover, Morgan Stanley’s research revealed that the share of broker-originated home loans processed by the major banks has increased, now representing 47 per cent of home loan flows.

The group attributed the rise to increasing complexities in the mortgage market, citing research from Australian Finance Group (AFG).

“We think this growth has been in response to rising mortgage product complexity and consumer preferences. For example, AFG reported that the number of its mortgage products rose  [by approximately] 135 per cent from 1,450 in 2015 to over 3,400 in 2017,” the report noted.

“Differentiated pricing and tighter lending standards are additional drivers.”

However, according to Morgan Stanley, CBA is the only big four bank that has reduced its broker flows, noting that its broker-originated home loans dropped from 45 per cent in FY17 to 40 per cent in FY18.  

[Related: Major bank haemorrhages $374m in remediation costs]