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Mutual lender reports strong mortgage growth following merger

The mutual banking group achieved strong home loan growth in the financial year 2023, according to its inaugural annual results as a merged entity.

Newcastle Greater Mutual Group (NGM Group) has today (20 October) released its inaugural financial results as a merged entity.

The NGM Group formed after Greater Bank and Newcastle Permanent merged on 1 March 2023.

Its inaugural results (for FY23) showed that the group’s total home loan portfolio surpassed $15.3 billion – an increase of $7.9 billion (+65 per cent) or $9 million (+0.1 per cent) when excluding the impacts of the merger.

Net loans and advances as at 30 June 2023 were $15.5 billion, an increase of $5.8 billion (+59 per cent) or $605 million (+6 per cent) excluding the merger, which the group said represented “strong underlying business momentum”, with loan approvals of $3.1 billion.

The group helped almost 10,000 (9,967) customers into new home loans over the past year with more than 1,200 being first home buyers, according to group chief executive Bernadette Inglis.

Ms Inglis stated: “Despite rising interest rates and slowing credit growth in the Australian market, in the months following the merger, both brands grew home-loan balances, taking total home-loan balances for NGM Group to $15.3 billion.”

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According to the financial results, deposits and borrowings grew by $7.3 billion (+66 per cent). However, after adjusting for the impact of the merger, deposits and borrowings decreased marginally by $73 million (-0.7 per cent).

The provision for expected credit losses was $25.2 million, representing 0.16 per cent of gross loans and advances.

However, NGM Group stated that 90 per cent of customers were ahead on their home loan, with a current 90-day delinquency rate “among the best in the industry at 0.09 per cent”.

Ms Inglis added: “Our arrears rate remains a point of pride, with 90 per cent of our customers ahead on their home loan, and with increasing interest rates and cost of living pressures, we’ll continue to work with and support our customers through these challenges.”

The consolidated entity said it will retain a “conservative level of provisioning to mitigate any future losses that may arise due to the uncertain economic outlook”.

Brokers writing a third of its mortgage business

NGM Group stated that approximately a third of its home loans were delivered by brokers, with the channel “adding more diversity and helping [the group] serve customers in more markets”.

Speaking to Mortgage Business, chief customer and digital innovation officer at the NGM Group, James Cudmore, added: “In a year of standout results, it’s been an exciting 12 months for our broker partnerships, with some serious expansion of our Newcastle Permanent brand’s award-winning channels.

“Specifically, we partnered with two new aggregators – Smartline [now part of Mortgage Choice] and The Lendi Group – to add some 600 accredited brokers.

“That takes us to a total of approximately 3,000 accredited brokers we are proud to be working with, allowing us to take our great products to more Australians and into regions beyond our traditional heartland.”

Digital loans key priority

The group added it would continue its focus on enhancing technology, including through the launch of “a cutting-edge digital home loan”.

It will reportedly enable customers to apply for a home loan in their own time and “receive conditional approval in as little as 30 minutes”.

Ms Inglis said the focus came as the group found that “97 per cent of [the group’s] transactions occur digitally”.

“We launched a cutting-edge digital home loan for Newcastle Permanent, with work well progressed on rollout to our Greater Bank brand, while the technology integration of our Hunter-based call centres ensures our digital future still maintains that vital human touch,” she commented.

“In an environment of more sophisticated scams and financial crimes, we continued to invest in our fraud and scam detection and prevention activities, implementing a range of systems enhancements.

“We also proactively offer education resources and run awareness campaigns for our customers on how they can protect themselves.”

While the Australian Prudential Regulation Authority (APRA) recently revealed a bank branch closure trend NGM Group stated that “branches remain a critical part of [its] future”.

The mutual group invested $3.5 million in refurbishing and updating branches in FY23, with new branches of both the mutual brands opening in Lismore following the floods in the region, while further branches in Kotara, Kurri Kurri and Ballina were all refurbished or opened.

NGM Group’s FY23 report also revealed it had achieved a 15 per cent uplift in new customer growth, taking its total to over 600,000.

Ms Inglis said: “In merging two Hunter-based companies with a similar geographic footprint, a commitment to mutuality, and closely held values established over decades, continuing to grow our customer base was recognised as being a key challenge – and one our people have taken on with great enthusiasm.”

[Related: A mutual merger 4 years in the making now confirmed]

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