Suncorp grows mortgages but records fall in SME lending

The regional bank grew its home lending portfolio by 2.9 per cent during the September quarter to $43 billion. Over the year to 30 September, Suncorp grew its mortgage book by 10.8 per cent.

“The bank continues to drive improvement in the quality of the mortgage portfolio underpinned by the introduction of strengthened customer serviceability criteria in response to the low interest rate environment,” the bank said in a trading update on Monday.

“Further, 89 per cent of new loans written over the quarter had a loan-to-valuation ratio of 80 per cent or less.”

However, Suncorp’s business lending portfolio contracted 1.4 per cent to $5.3 billion over the quarter. Over the year to 30 September, Suncorp Bank saw a 7.3 per cent contraction in its commercial lending book.

“The result was a reflection of intense price competition within the bank’s target segments and risk selection informed by improved risk modelling capabilities,” the group said.

“The bank continues to pursue lending growth in target market segments.”

Suncorp affirmed that its strong relationship with intermediaries remains integral to enhancing portfolio diversification outside of traditional Queensland markets. As evidence of this, over 75 per cent of the bank’s home lending portfolio growth during the quarter originated outside of Queensland.

The regional bank’s total lending assets grew by 2.0 per cent to $53 billion and credit quality improved on all metrics.

Suncorp Bank CEO John Nesbitt said the improvement in credit quality demonstrated the bank was realising the benefits of investment in risk management capability, culture and technology in operating under the Basel II Advanced Accreditation Program.

“These results demonstrate that the bank’s Advanced Accreditation Program is already improving the way we do business,” Mr Nesbitt said.

Impairment losses decreased to $6 million, representing an annualised rate of four basis points of gross loans and advances. Gross impaired assets decreased 7.3 per cent to $202 million, demonstrating the bank’s focus on credit quality across all lending portfolios.

“The bank continued to achieve key milestones during the September quarter in the delivery of key strategic projects and we are encouraged about the progress we’re making towards advanced accreditation,” Mr Nesbitt said.

Suncorp Bank’s Common Equity Tier 1 ratio increased to 8.86 per cent as at 30 September 2015.

Mortgages account for over 80 per cent of the bank’s lending assets.