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BNK Banking Corporation’s (BNK) financial results for the 12 months to 30 June 2024 have shown that the lender has maintained a small number in customer arrears over the period.
BNK CEO Allan Savins said that the banking sector continues to experience “challenging market conditions” as increased interest rates add pressure on margins while creating “fierce competition across all asset classes”.
However, Savins said that despite these pressures, BNK’s customer base “remains resilient” with approximately 44 per cent of its loan customers remaining ahead in their repayments.
“We had anticipated a rise in arrears during the financial year, however, [we] are pleased to report this remains a very small number in real terms and we are well provisioned in this regard,” Savins said.
Additionally, BNK reported that its loan book “remained steady” at $1.37 billion, reflecting the company’s focus on changing its portfolio composition.
Indeed, Savins said that during the financial year, BNK continued its transformation to “create solid foundations to achieve sustainable profitability”.
“Given the intense competition in Australia’s residential mortgage industry, we have been focusing on higher margin and capital efficient assets, coupled with disciplined cost control,” Savins said.
BNK’s higher margin lending portfolio increased by 32 per cent on the previous corresponding period (FY23), up to $257 million.
“Despite an overall steady loan book, we achieved positive underlying NPAT, demonstrating that our emphasis on higher margin assets reduced the need for loan book expansion to attain sustainable profitability,” Savins said.
“Moving forward, our focus will continue to be on optimising risk-weighted assets and reallocating capital to support future target asset growth.”
The company’s transformation strategy also includes BNK launching the first stage of the BNK branded commercial loans for new business, according to chairman Jon Denovan.
This financial year saw BNK acquire around $80 million of high-margin, floating-rate residential mortgages from the investment banking company Goldman Sachs.
BNK acquired the residential mortgages portfolio – which has a maximum loan balance of $2.94 million and a weighted average current loan-to-value ratio (LVR) of 57 per cent to a maximum LVR of 80 per cent – in late March this year.
Savins said: “The expansion of the Goldman Sachs off-balance sheet warehouse remains an important strategy for boosting the bank’s income from sources other than interest.
“Technology remains an important enabler and we will continue to invest in technological upgrades to improve our value proposition and efficiencies for both our customers and staff.”
[RELATED: BNK loan book holds steady in 3Q24]
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