FNB’s Home Loan division is going strong, having grown advances by 6% on a year-on-year basis as at December 2014, and by 13% over the last 3 years. This compares well with the growth achieved in the market, excluding FNB, of 0.5% in the last year and 5% over the last 3 years.
“We are outgrowing the market in terms of our mortgage loan book,” says Marius Marais, CEO of Home Loans at FNB. “This can be attributed to both our successful partnership model, internally within FNB and externally with our industry partners, as well as on the back of FNB transactional customer growth that has increased its penetration into the South African market by materially increasing its customer numbers.”
The growth in market share has been achieved whilst also maintaining the lowest level of credit losses, at 8bp for the last year and an average of 23bp over the last three years, versus an average of 23bp and 82bp for the market, excluding FNB, respectively. The percentage of FNB’s home loans that are non-performing, at 2.9%, versus 4.4% for the industry, demonstrates that its superior levels of growth has not come at the expense of credit quality.
“Our strategy is to look for economically profitable growth opportunities on an individual and property basis, which gives us a comprehensive view of the risks we face,” says Marais. “We believe we have good risk assessment tools and capabilities, an executive leadership team with many years of home loans experience over different parts of the economic cycle and a consistent approach to the market.”
FNB has been successful in growing its customer numbers and Home Loans book in Gauteng and is looking replicating this success in the other major metropolitan areas.
In terms of its product features such as the Future Use and Flexi options are proving popular with clients, as they provide financial flexibility.
The Future Use option allows clients to save money in the future by registering a higher bond in the Deeds office at the time of taking the loan, thereby allowing them the opportunity, in the future, to borrow, without having to pay further legal fees or wait for the bond registration process of around two to three months before the loan proceeds can be paid out to the client. With the Future Use option, further lending is realized in a matter of days.
In terms of the Flexi option, customers are able to use their Home Loans as effective savings tools by increasing their repayment amounts. Customers benefit through large interest savings, paying their loans off quicker, or by having access to some emergency funds available in their home loans, that is accessible at any time.
“We would like to see everyone move onto the Flexi option,” Marais, “We believe this can help customers improve their financial flexibility and resilience by building up some savings within their home loan to assist with unforeseen events.”
Customer service is at the core of FNB Home Loan’s business strategy, in terms of both lending strategy as well as when customers experience financial difficulties.
“The impact of assisting customers from when they first start to get into financial difficulty makes a significant difference to the overall debt process,” say Marais.
Since the bank started with its Quick Sell programme in 2009 FNB Home Loans has assisted customers to sell 7,500 properties by offering them a workable solution to help them to rebuild their lives without a debt burden that cannot be serviced.
“While we don’t expect to see a big difference in our lending criteria in the near future, we are working on innovations in the customer solution space to use electronic platforms to make every interaction with the customer, across the life cycle of the bond, easier and more efficient,” says Marais.
FNB Home Loans expects to make announcements on new innovations in this space in the near future.