Mortgage brokers key channel for profit-surging banks: KPMG

Mortgage advisers are predicted to continue to be an important source of business for Kiwi banks as they soar to new heights of profitability.

KPMG has today released its latest Financial Institutions Performance Survey, for the June quarter.

It showed banks bounced back to profitability after a drop the previous quarter.

As a sector, they made $1.424 billion in the quarter, a 14.6% increase after an 11.35% drop the three months prior.

The increase in profit can be attributed to an increase in net interest income of $48m and non-interest income of $77m, paired with a decrease in impaired asset expense of $116m and operating expenses of $7m, with only an increase in tax expense offsetting the growth in profit.

Loan growth across the banks continued at a steady rate, with Heartland marginally ahead of TSB for the quarter and with year-to-date growth of 12.28% and 13.61% respectively. BNZ, ANZ and CBA-owned ASB also experienced an upwards trend in loan growth for the quarter with growth of more than 1.5%.

Kensington said banks saw mortgage brokers as a very important source of that lending business.

There would be more scrutiny of the conduct of the channel as a result of the Australian Royal Commission, he said, and banks would want to ensure they had clear visibility of each deal.

But he said it was such a huge source of business for them that they would maintain the channel.

“They are a great channel fort the banks. Lots of New Zealanders don’t really know what they are doing. They want a house and they know they have to have a loan but hey don’t know how to go about it.”

An earlier KPMG report showed a surge of interest in non-bank lenders, as banks tightened their lending requirements. He said brokers had driven that.

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