Share of broker-sourced residential loans also rises to 75%
The first home buyer market is making a comeback with Great Southern Bank announcing its biggest increase in home loans issued to first home buyers – a 43% lift in its half-year results for the period ending December 31, 2023.
The bank, one of the largest customer-owned banks in Australia, reported that it now supported about 2.5% of all Australian first-time buyers, up from 1.5% in the first half of FY2023.
Great Southern Bank also reported that the proportion of home lending sourced from mortgage brokers had risen to 75% for the half year, while the bank’s active customers grew to 408,000.
However, the first-half FY2024 results published on the bank’s website also revealed that group net profit after tax (NPAT) was “softer” at $16.9 million due to increased competition and rising funding costs, relating to the end of the RBA Term Funding Facility reducing net interest income.
Commenting on the results, Great Southern Bank managing director and CEO Paul Lewis (pictured above) said the bank continued to see “strong demand from first time buyers looking for a customer-focused banking partner to help them through this critical stage in their lives”.
“We are building enduring relationships with these new homeowners so we can continue to partner with them as their financial needs evolve and change – from upgrading to their next home or buying an investment property, to starting their own small business and saving for their children’s future,” Lewis said.
The bank had also increased its focus on residential investors, with a higher flow of investor lending, peaking at 28% of loan issuance in December.
Lewis said Great Southern Bank continued to support brokers via its $10K Broker Boost, which encouraged brokers to learn more about the bank via events and updates, earning them an entry into a monthly draw to win $1,000 for their business.
Great Southern Bank – lending and sustainable profits
Market conditions and sector-wide cost pressures had contributed to the lower NPAT, said Lewis, but the bank’s strategic investments in its digital infrastructure, risk management systems, IT capabilities, and new micro-business platform would support future growth.
“Despite the tighter market conditions, we continue to make sustainable profits, ensuring we can continue to support our customers, invest in new and better products and services, and grow the bank,” Lewis said.
“In particular, we have publicly launched our digital-first, micro business bank offering – an offering designed to help the vast number of dissatisfied small businesses that have historically been under supported and ignored by the big banks.”
The home lending arrears ratio was largely flat, and significantly lower than many of the biggest banks, the bank reported.
“The bank’s proactive customer retention strategy ensured that significant numbers of customers remained with the bank after the completion of their fixed rate loans,” said Lewis.
Requests for financial assistance were up 13% year-on-year, but remained well below the peak during the COVID-19 pandemic.
“It’s encouraging that we are not seeing a significant ongoing need for assistance but rather customers are seeking support to help manage through critical, defined periods,” Lewis said.
“Around three quarters [73%] of customers received assistance for a period of only one to two months, which often is just about getting some breathing space – a moment to regroup, regain their confidence and get back on track.”
Key improvements for Great Southern Bank customers
Lewis said the bank had made improvements in a number of areas which would help customers. These included:
- time to yes – a measure of how fast the bank approves a home loan – continues to fall, and the average is now below four days [3.9 days] with the majority [52%] approved in less than two days;
- being the first in the industry for on-time home loan settlements in the first half of the year, giving customers a positive and smooth homebuying experience;
- significantly improved customer service and response times through the bank’s Australian based contact centre, with average wait times falling and an increased number of queries resolved during the first call; and
- the net promoter score increasing nine points over the period.
Sustainability and community impact
Lewis said Great Southern Bank had also made further progress on key sustainability strategy initiatives, including:
- launching a $1 million, three-year partnership with Mission Australia, with energy and water efficiency upgrades to community housing in NSW underway. This was a key deliverable under the bank’s second Financial Inclusion Action Plan;
- powering around one third of all the bank’s properties through renewable energy, with plans in place to transition all sites to renewable energy;
- successfully launching two new green personal loan products in August to help customers reduce their energy costs at home and cut carbon emissions; and
- launching a second Reconciliation Action Plan in December, an ‘Innovate’ RAP detailing how the bank will work to address the structural barriers to financial inclusion that First Nations peoples experience
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