Bendigo reveals investor loan strategy

Fielding questions from banking analysts yesterday, Mr Fennell emphasised that the regional bank has not made any decisions regarding the repricing of its investor home loans at this stage.

“We’ve been growing below system in that space,” Mr Fennell said.

“We will look to monitor very closely what happens from a volume perspective to make sure we stay below the 10 per cent and if we need to increase our price in that space to stay below the 10 per cent then we’ll do that and obviously that would have a positive impact,” he said. “But what we would prefer to do right now is sit back and watch to see how things settle and see if this gives us an opportunity to get back more towards system growth rates in our investor mortgages.”

Mr Fennell’s comments come after a number of repricing measures were announced by different banks in recent weeks.

Last month, NAB raised the rate of its interest-only loans by 0.29 per cent, effective on new loans this week and on existing loans from 10 September.

Westpac capped LVRs on all stand-alone investment lending at 80 per cent, while CBA repriced its investor loans by 27 basis points, effective this week. ANZ announced the same increase, which also went into effect this week.

The latest APRA figures show Bendigo and Adelaide Bank’s investor loan book at $11.12 billion, a 7.81 per cent increase over 12 months and safely below the regulator’s 10 per cent threshold.

With the bigger banks hiking prices on investor home loans, Bendigo and Adelaide Bank’s CEO Mike Hirst sees an opportunity for the regional player to gain market share.

“With the repricing that has taken place and there is still a little bit to settle on some of that I think, and there have been different approaches by different organisations, those prices are certainly coming back to those prices that we’ve had in the market,” Mr Hirst said.

“So we are comfortable that we can make a reasonable return at those levels,” he said. “And then it comes down to, why is the customer going to choose you over somebody else?

“As long as you can be in the ball park on that pricing, we are comfortable that our value proposition will take us forward and I think we are already starting to see some signs of that.”

The regional lender yesterday announced an after-tax statutory profit of $423.9 million for the 12 months ending 30 June 2015.

Underlying cash earnings were $432.4 million, a 13.1 percent increase on the prior corresponding period.