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One bank retreats from advisor and another bank moves forward

Kiwibank has entered the advisor market and is running a pilot program with two dealer groups.

Monday, March 1, 2021 9:43 AM

This move is another New Zealand Bank, TSB, One step from the advisor market..

Kiwibank does not name affiliated groups. However, CEO Steve Jurkovich expects to start working with more groups later this year.

“The biggest single trend in the (lending) market was broker growth,” he says.

Kiwibank’s advisor products are technology-driven, cloud-based and designed to provide a seamless process.

Float alone

Last year, Kiwibank cut variable mortgage rates by 100 basis points, but Jakovich is surprised that other big banks aren’t following the bank’s move.

He says it’s popular with customers. “50% more people choose floating than they did a year ago.”

It’s a victory for banks and customers. Banks have high floating rate margins and borrowers are more flexible, especially when it comes to repayments. In addition, it provides customers with the opportunity to repay their loans faster, save money and buy locally to support New Zealand’s economy.

“We, like other Aotearoa, have the largest banks meet this challenge of lowering floating or floating rates, despite the very low interest rate environment and access to reserve bank financing. I’m still waiting. “

Most mortgages are written with a fixed term of one or two years, but Jurkovich states that Kiwibank is using floating rates to significantly increase its customers.

Banks have seen an increase in applications overall. Previously it was about 750 a week, but that number has grown from 1,100 to 1,150.

One of the ongoing problems for lenders is that not all approvals result in drawdowns. It’s an industry-wide problem, but there’s no way to fix it, he says.

Earlier this year, the bank opened a new professional lending hub on 155 Fanshawe Street in Auckland.

It is located in the fast-growing part of the city where many of the big companies are relocating.

According to Jurkovich, the hub provides customers with a mortgage advisor-like experience and the convenience of being able to discuss mortgages during working hours.

He says the bank has significantly accelerated the adoption of digital processes. Covid-19 is pushing this forward, years ahead of where banks were expected to embark on their digital journey.

“Customers are also benefiting from an improved process, reducing mortgage decision time and reducing call latency despite the significant volume increase from Covid-19.” He says.

Numbers

Kiwi Bank’s net income after tax increased 8% to $ 55 million in the six months to December 31st. Operating income increased $ 10 million to $ 287 million.

Growth in mortgages and business lending contributed to the results, with customer lending increasing by $ 1.6 billion. Customer deposits also increased by $ 1.3 billion, Jurkovich said.

Bank mortgages grew at about 1.5 times the growth of the system during the period.

Kiwibank is balanced and not “overfilled with boots,” Jurkovich said. He described it as a “solid” result and said it was far superior to what he would have expected when asked when the Covid-19 pandemic began a year ago.

“We expected mortgage and business banking loan defaults to increase significantly, but that number remains very low, thanks to all New Zealanders keeping the economy moving by containing the virus.”

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One bank retreats from advisor and another bank moves forward

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