Drylie says the bank’s push into the mortgage adviser market has been “very positive for us".
He says more than a third of its home loans are originated through this channel and it is “good quality business".
“It is a really positive channel for us.”
Under SBS’s model advisers can deal with branches and he says some advises are frustrated dealing with broker centres, which is the model others use.
“We’ve been really pleased with how our story is being received by the broker channel.”
In the most recent financial year SBS has seen 21.2% growth in residential lending.
“We have to ensure we don’t grow too fast,” Drylie says.
The bank has also seen good strong growth in its deposit book. Currently, around 90% of advances are funded through retail deposits.
Drylie doesn’t expect this strong level of growth to continue, especially as the Christchurch and Auckland housing markets have softened.
There is still an uptick in provincial centres, he says.
Welcome Home Loans is an important part of SBS’s lending book, and it makes up a good share of growth.
Drylie says the government and Housing New Zealand need to look at the caps, particularly in metropolitan areas. Currently they sit at $600,000 for existing and older homes in Auckland and $500,000 in other areas.
He says SBS has reviewed its mortgage adviser remuneration model since he took over the helm at the bank.
The key change is that it is “focussing in on brokers who support our story strongly".
The bank pays 70 basis points upfront and an additional 20 basis points to advisers who put more business with it.
“SBS can’t be everything to every broker,” he says. “We want to support those who support us.”
“I see it more as a partnership model going forward, rather than a broad distribution strategy."
Drylie says he is looking to add more features to that model.
With regards to introducing trail commission he says, that’s “not something I am instinctively drawn too.”
“My natural inclination is no. It works for us quite well with upfront and some bonus. Maybe over time we need to think about how we acknowledge the relationship side of it for the brokers geared up that way.”
While introducing trail commission is not on the cards immediately, “I’d never say never on it.”
Drylie acknowledges trail is slightly more expensive, and that banks are always looking at their cost base, especially in the current environment.
SBS is generally a market leader when it comes to pricing on its home loans. Dylie says this is partly because it is a member-owned bank and doesn’t have to pay dividends to shareholders.
It rewards its members with offers from time to time, while fellow member-owned bank, The Co-operative Bank pays out rebates.
Drylie says SBS is doing some work on what else it can do to support members, and looking to see if there is anything else it can do.
“There’s some good work happening under the covers at the moment,” he says.
“The great thing about our business is that the profits aren’t shooting offshore.”
More RBNZ restrictions
Drylie says it is unlikely the Reserve Bank will implement debt-to-income ratios anytime soon.
He understands the systemic problem the central bank is grappling with, but thinks it’s too late in the cycle to bring in DTIs.
“At this stage I think it would make things very challenging for the consumer and the banks (if DTIs were introduced now).
The Reserve Bank will DTIs in its tool box and they will be ready to use in next cycle, he says.
One are of focus for the bank in recent time is its positive thinking around digital tools for customers.
SBS has introduced an open architecture approach to its systems which will allow it to develop new tools and services from other software providers, rather than having to rely on proprietary systems.
“It’s a really good story for us going forward,” Drylie says.