AMP Bank has increased the size of its loan books and boasted some positive financial results that include strong growth in the broker channel.
The bank’s total loan book grew by $1,927m to $17.1bn in FY16, an increase of 13% from the prior financial year. This included an increase of $1.908m to $16.5bn in its residential mortgage book through strong growth in owner-occupied lending.
These upwards trends came through both the broker and AMP-aligned advisor channels. While sales in the AMP-aligned channel were up by 24% from FY15 to FY16, the share of new business brought in via the bank’s advisors fell from 24% to 22% due to growth in the broker channel.
“We’re expecting continued strong growth in the broker channel going forwards. The amount of mortgages that are originated through the broker channel would be more than half of the mortgages originated by AMP Bank,” AMP CEO Craig Meller said at the AMP Full Year 2016 Results media briefing.
As of 31 December 2016, owner-occupied loans made up 74% of the bank’s mortgage portfolio while the remainder was investment lending.
AMP also maintained low levels of risk with 90+ day mortgage arrears sitting at 0.43% as of December 2016. The bank’s existing business weighted average loan to value ratio (LVR) is at 68%.
Following increased macro prudential regulations and the investor speed limit effectively placed on the industry, Meller also said AMP Bank may
follow certain other lenders by putting the brakes on investor lending.
“When large players take actions to slow their books, unless AMP Bank takes actions accordingly, it could blow our business out with very significant increases in volume. As we see the market environment changing, we’ll be adjusting our approach in response to what we’re seeing in the marketplace more generally.”
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