Kiwibank says cost of adviser business is marginal

The cost to a bank of using mortgage advisers to originate mortgages is marginal compared to the cost of running its own proprietary origination operation, according to Kiwibank chief executive Steve Jurkovich.

Friday, March 14th 2025, 8:04AM

by Jenny Ruth

“We have banking specialists, both at the front line in branches and in the broader contact centres and embedded in our business,” Jurkovich told TMM Online.

Such bank officers are there to answer questions such as how to structure a mortgage and they’re in place to deal with customers regardless of whether or not the customer decides to proceed with the loan.

Possibly the customer wasn’t successful in bidding at an auction or they simply changed their mind.

“It’s a fixed cost for us, regardless of the volume that’s created and we’re 100% happy with that,” Jurkovich says.

“With the adviser channel, we only have to pay for the business we actually write so it’s a much more marginal cost.”

Jurkovich was responding to Commonwealth Bank of Australia chief executive Matt Comyn’s assertion last month that his bank’s mortgages written by its own proprietary channel are between 20% and 30% more profitable than loans originated by advisers.

Jurkovich says different banks make different assumptions about where the costs actually lie. “There’s no real right or wrong. It’s really about what you assume.”

But his own view is that if the adviser channel is less profitable than the proprietary channel, that the difference is only marginal.

For Kiwibank, “we want to be where Kiwi are and more Kiwi are choosing to be in front of an adviser so we need to be there,” he says.

“It’s the channel that’s growing the fastest and it’s a marginal cost for us. I feel like the economics might be marginally in favour of the proprietary channel, but that’s not my primary focus. I’m not convinced there’s anything more than a moderate difference in terms of the cost.”

There are no hard numbers available for the percentage of mortgages advisers in New Zealand write, largely because ASB doesn’t disclose its data on this, but from the other major banks’ data it’s definitely more than 50% and could be in excess of 60% compared with about 75% in Australia.

Jurkovich says in calendar 2024, advisers originated about 70% of Kiwibank’s mortgages by volume with 47% coming from third party advisers and the rest from sister company NZ Home Loans.

Kiwibank added another 250 accredited advisers since June 30 last year taking the total number that it deals with to 1,240.

Jurkovich says his bank is working an ensuring that these advisers feel confident and comfortable in dealing with Kiwibank and to deepen its relationships with advisers, and that is its current focus rather than adding more accredited advisers.

“If they’ve only done one or two deals, are they really feeling confident?”

The bank greatly values the feedback it receives from advisers and it responds to such feedback by adapting its policies and procedures.

“That’s about getting used to each other. Ultimately, the goal’s pretty simple: we want to be top of the list. We’re working all the time to see how we can make things simpler and easier for everyone.”

As for the quality of advisers’ work, Jurkovich says it’s 100% and he has no complaints.

Tags: Kiwibank