94% of AMP Bank’s resi loans written by brokers

Financial services group AMP has released its financial results for the first half of the calendar year 2023 (1H23), revealing that its mortgage book grew 8.3 per cent on last year.

Over the half, the bank provided home loans to 4,295 customers, increasing its residential loan book to $24.3 billion.

Notably, the vast majority of new loans – 94 per cent of its residential mortgages – were written by the broker channel.

This is the highest proportion of broker-originated loans the non-major bank in recent years and follows on from the 92 per cent originated in 1H22.

Speaking to Mortgage Business about the uptick, group executive of AMP Bank, Sean O’Malley, commented: “As seen in our results, mortgage brokers continue to be an important part of AMP Bank’s distribution strategy and driving our growth agenda.

“We’re delivering ongoing enhancements to improve turnaround times for customers, along with increasingly digitalising and streamlining the lending experience across our channels for our broker and adviser partners.”

Investments in its loan processing have reportedly reduced the bank’s turnaround times to an average of 8.4 days.

However, the bank noted that the half had seen a “challenging market” in mortgages, particularly as competition ramped up.

AMP chief executive Alexis George said that the bank had achieved “disciplined mortgage growth in a competitive environment”, flagging that the bank had moved to a “prudent risk appetite” in the financial year 2021, limiting its high loan-to-value ratio lending.

Indeed, its dynamic LVR at June 2023 was 53 per cent.

Around 65 per cent of the mortgages were for owner-occupier borrowers, one of the lowest proportions in recent years. Investor lending, meanwhile, increased to 16 per cent.

While the majority of AMP Bank customers were ahead on the repayment schedule (with 42.7 per cent being one to three months ahead), the proportion of borrowers who were in arrears increased.

The results showed that 30-plus days and 90-plus days both ticked up over the half (which it attributed to the recent interest rate rises) – to 1.31 per cent and 0.55 per cent, respectively – up from 0.70 per cent and 0.39 per cent last year.

However, the bank said it had a “really important focus in terms of curing those situations, particularly as they emerge” and that it had been able to help customers with early-stage intervention.

Looking forward, Ms George commented: “We want to focus on growing the bank in a disciplined manner.

“It is a very competitive market at the moment, both for funding and for mortgages and we need to remain focussed on that return on capital.”

In 1H23, the bank’s underlying net profit after tax increased by 23.9 per cent to $57 million, which it said was “driven by disciplined loan growth and supported by our strong broker relationships”.

The non-major bank recently announced the acquisition of Nano Digital Home Loans’ residential mortgage portfolio.

[Related: Almost 70% of mortgagors worried about repayments: AMP]