The move comes as another New Zealand bank, TSB, steps back from the adviser market.
Kiwibank won’t name the groups it is working with. But chief executive Steve Jurkovich expects to start working with more groups later in the year.
“The biggest single trend in the (lending) market has been the growth of the broker,” he says.
Kiwibank’s adviser offering is technology-driven, cloud based and designed to give a seamless process.
Floating alone
Last year Kiwibank cut 100 basis points off its floating home loan rate and Jurkovich remains surprised none of the other big banks have followed the bank’s move.
He says it has been popular with customers; “Fifty per cent more people are choosing to take floating than a year ago.”
It’s a win for the bank and customers. The bank has higher margins on floating rates and borrowers get more flexibility, especially around repayment. Plus it provides an opportunity for customers to pay back their loans faster, save, or buy local and support New Zealand’s economy.
“We, like the rest of Aotearoa, are still waiting for the largest banks to respond to this challenge to lower floating or variable interest rates despite a very low interest rate environment and access to Reserve Bank funding.”
While most home loans are written on one and two year fixed terms, Jurkovich says Kiwibank has seen a significant pick up in customers using its floating rate.
The bank has seen a lift in applications overall. Previously it was getting around 750 a week and that figure has ballooned to between 1,100 and 1,150.
One of the ongoing issues for lenders is not all approvals result in drawdowns. While it is an industry-wide problem there is no way to fix it, he says.
In the first half of this year the bank opened a new expert lending hub at 155 Fanshawe Street in Auckland.
This is situated in a fast-growing part of the city where many of the big corporates are relocating to.
Jurkovich says the hub gives customers an experience which is more like a mortgage adviser and it offers the convenience of being able to discuss a mortgage during working hours.
He says the bank has hugely accelerated its adoption of digital processes. Covid-19 has driven this and has put the bank a number of years ahead of where it expected to be on its digital journey.
“Customers are also benefiting from improved processes resulting in shorter turn arounds for home lending decisions, a reduction in call-wait times despite a huge uplift in volume due to Covid-19,” he says.
The numbers
Kiwibank’s net profit after tax rose 8% to $55 million in the six months to December 31. Its operating income was up $10 million to $287 million.
Growth in home loans and business lending contributed to the result, with customer lending growth of $1.6 billion. Customer deposits also grew by $1.3 billion, Jurkovich said.
The bank’s home lending grew at around one and a half times system growth during the period.
Jurkovich says Kiwibank has got its balance right and it was not “filling its boots too much”. He described it as a “solid” result and said it was much better than what he would have predicted if asked a year ago when the Covid-19 pandemic started.
“We had forecast a significant rise in mortgage and business banking loan defaults, but numbers remain very low largely thanks to the hard mahi of all New Zealanders to contain the virus and keep our economy moving.”
