Currently, the Invercargill-based bank has about 1700 broker agreements in place, but it plans to focus on a much smaller number of people. While the number hasn't been decided it could be as low as 100.
SBS chief executive Shaun Drylie said the bank wanted to play to its strengths and partner with advisers who truly buy into the SBS story and its philosophy.
"It's better to be more focussed on a relationship with a few," rather than everyone.
"It’s unlikely we’ll remove brokers from current agreements. It will be about focusing on the brokers that like our story (quality business written or a connection with our brand) through improved service standards and empowerment, rather than saying “no” to the rest," Drylie says,
He says mortgage advisers play an important role in distribution with between 45-55% of business coming through this channel. That is partly because the bank has a small physical presence across the country.
While are advisers important,he believes changing the model will actually increase the volume of home loans which come through advisers.
"To me it will secure more business, and better business," he says.
The big banks, by default, have "an obligation" to deal with everyone, he says, however a smaller bank like SBS doesn't have the resources and marketing power to deal with the whole market. By building strong relationships with a smaller number of advisers it can provide a better service and proposition to those who want to work with SBS.
Drylie says the advisers it will work with will become "advocates" for the bank and buy into its story which includes being New Zealand-owned and an organisation that gives back to its members.
They will be rewarded with things like better empowerment and service.
"Some brokers understand who we are and others wouldn't have a clue."
He says the story is more than just being about price. While SBS has in recent years been a leader in the price battle it has now pulled back a little. Drylie says it want's to be in the leading part of the market but it doesn't have to command the one and two spots.
SBS is also looking to ramp up its home equity release business. Drylie says it fits with SBS's mission of helping members. While the focus has been helping them into houses, HER is about keeping them there when members get older.
The big banks have retreated from this market (ASB played there for a little while) and there needs to be more competition. (Currently Heartland is the only provider and FMT has a product but does little in this space).
"There is room for a player like ourselves," Drylie says. "There's not enough competition in the market."
While SBS has a HER business it also bought a book from Deloittes recently. This is one of the businesses which was active in the market before the GFC.
The SBS group, which includes subsidiaries Finance Now, FANZ and Southsure, reported an operating surplus of $40.8 million, up from $35.3 million in the previous year. Members’ Equity is up $29.4 million, or 10% on last year, to $324 million.
“One of the highlights of the result is the contribution of all of our entities as well as balanced growth, with lending up $181 million (5%) on last year, alongside strong retail funding growth, up $191 million (6%).
“While SBS Bank has been a key contributor with improved profitability due to asset growth and improved productivity, this also reflects another significant contribution of our Finance Now business,” Ward said.
SBS Bank’s total capital ratio has increased across the year to 14.18% due to moderation of growth relative to profit and the issuing of Capital Bonds and remains well above the regulatory minimum (8%).