Non-major sees drop in loan approvals

According to its results for the first half of the financial year 2017, Auswide Bank’s underlying cash profit after tax rose by 7.92 per cent in the six months to 31 December 2016 (compared to the prior comparative period), adjusted for the effects of non-recurring items.

However, although the bank saw a marginal rise in loan book growth, up from $2.66 billion at 30 June 2016 to $2.67 billion at 31 December 2016, the value of loans approved during the half year dropped by 8.74 per cent (compared to the first half of the financial year 2016) to $269 million.

The bank said that loans approved in the first quarter were “conservatively managed” to facilitate the implementation and testing of the bank’s new Lendfast loans processing system and to support the integration of the Your Credit Union business and systems.

According to Auswide, following the acquisition of Your Credit Union in May 2016, there had been a “focus on extracting synergies from the merged entity and system integration”, which were realised in September 2016.

It also aims to grow its Business Banking channel through its increased presence in south-east Queensland, with the establishment of a Brisbane branch following the acquisition of YCU.

Looking forward, the bank said that sales as a whole will be a “major focus” for the rest of the year as “further emphasis is placed on growing the loan book”, while loan growth is expected to improve in the second half boosted by the recent repricing of existing home loans.

The non-major said that it will also “focus on growing its broker base through maintaining and further developing relationships in that space”.

In terms of flow, Auswide revealed that 53 per cent of loan approvals in the last six months came from the broker channel while 47 per cent was direct.

Touching on its broker strategy, a spokesperson for the bank told Mortgage Business that the board said it would “comfortable” with up to 60 per cent of its new customers being introduced to via broker partners.

He added: “We are currently investing time and resources to improve the experience of both our brokers and our new customers as they enter Auswide.”

Speaking after the release of the half-year results, the bank added that its partnership with P2P lender MoneyPlace, along with its direct personal loan channel, are expected to reach $30 million by June 2017. This represents an expected increase of $20 million over the full financial year.

Based on the company’s performance for the six months, the board has declared a fully franked interim dividend of 14 cents per share payable on 30 March 2017.

[Related: Non-major cuts mortgage rates]