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BNK Banking Corporation confirmed it has purchased approximately $80 million worth of high-margin residential floating rate mortgages from a warehouse financed by Goldman Sachs.
BNK performs the origination, underwriting, and servicing roles for the investment banking company.
The maximum loan balance of the portfolio is reportedly $2.94 million, with a weighted average current loan-to-value ratio (LVR) of 57 per cent and a maximum LVR of 80 per cent.
As a result of the transaction, BNK’s loan book will increase by 5.6 per cent to $1.5 billion and is accretive to its net interest margin, the lender confirmed.
BNK chief executive Allan Savins commented on the transaction: “The acquisition of these higher-margin residential mortgages represents the optimal use of capital and provides BNK with added growth impetus, bringing us closer to achieving our goal of sustainable cash profitability.
“The transaction will also free up BNK’s additional funding capacity for the specialist warehouse and will be revenue accretive for the bank.”
In March last year, BNK increased its loan book by 13 per cent after purchasing $150 million worth of high-margin residential mortgages from Goldman Sachs.
In 2021, BNK established an uncommitted $500 million specialist residential securitisation warehouse with the banking company.
As part of this alliance, Goldman Sachs has provided funding and acted as an arranger, structuring agent, and distributor, while BNK Bank acted as an originator, service, and trust manager for a securitisation program.
Loan book increases in 1Q24
Prior to this acquisition, BNK reported (31 October) that it hit a record high for its loan book of $1.41 billion during 1Q24, increasing by 5 per cent on the previous quarter.
According to the lender, the growth was aided by its continued expansion into the higher-margin lending space, which has been a key strategy for the group recently.
It followed the lender having grown its high-margin lending portfolio to $195 million in the financial year 2023, representing approximately 15 per cent of its loan book, with BNK setting the goal for the high-margin lending portfolio to reach 20 per cent of total FY24 settlements.
Savins commented at the time: “BNK has started the year well, with steady increases in both our loan and deposit books.
“Our direct loan-to-deposit ratio of 80 per cent reflects our competitive products and ability to continue carving out market share in a complex interest rate environment.
“BNK remains well capitalised and we are dedicated to growing our higher-margin product solutions while carefully managing our funding costs as we work towards minimising our liability concentrations and diversifying our product mix.”
[RELATED: BNK loan book up 5% in 1Q24]
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