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Auswide Bank has reported “solid” growth in its home lending portfolio in the “challenging” 2019 financial year.
The non-major bank’s mortgage settlements in FY19 rose by 13.3 per cent over the year to $616.04 million, compared to $543.53 million in the previous year.
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The value of Auswide Bank’s home loan portfolio was $2.95 billion at 30 June 2019, up 6 per cent from $2.78 billion a year earlier.
Consumer loans also grew from $44 million in June 2018 to $62 million a year later, while business loans increased from $120 million to $122 million in June 2019.
Auswide’s total loan book (comprising mortgages, personal loans and commercial loans) grew to $3.13 billion at the end of June 2019, up 6.3 per cent year on year (YoY) from $2.95 billion in the prior year.
“The loan book growth of 6.3 per cent compares favourably with the Reserve Bank of Australia data, which discloses credit provided to the private sector increased by 3.3 per cent over the 12 months to June 2019,” the lender’s disclosure to the ASX stated.
The lender also reported a decline in 30-day plus arrears from 0.48 per cent of its loan portfolio in FY18 to 0.46 per cent in FY19.
Further, 73.8 per cent of its mortgage book, or $2.27 billion, comprises home loans with a loan-to-value ratio (LVR) of up to 80 per cent, compared to $805.6 million with an LVR above 80 per cent.
The lender’s statutory net profit after tax decreased by 3.8 per cent over the year from $17.89 million in FY18 to $17.2 million in FY19.
Commenting on the financial results, Auswide managing director Martin Barrett noted that the 2019 financial year was a “challenging” one due to “volatile BBSW levels and historically low interest rates”, as well as an “extremely competitive” market for loans and deposits.
“However, we made excellent progress in growing our loan book and optimising our funding mix. Customer deposits now account for 71.4 per cent of our funding, and we remain focused on achieving disciplined growth while balancing our loan book and funding targets,” Mr Barrett added.
He noted that the change in its funding mix – with 12.6 per cent growth in customer deposits in FY19 – would enable the bank to better control its net interest margin, which dropped from 1.93 per cent in FY18 to 1.87 per cent in FY19.
The bank’s three-year strategic plan for FY20-22 includes: boosting brand awareness, such as by increasing broker flows and other community engagement initiatives; building partnerships to drive retail and business banking growth, including by appointing a partnerships manager; and improving the customer experience through “digital implementation”.
The strategic plan also includes: improving efficiencies through process automation and product simplification, “strengthening the bank” by enhancing capabilities and enhancing cyber security and fraud detection capacity, and driving non-organic growth via partnerships with fintechs or mergers and acquisitions.
[Related: Lenders respond to RBA move with mortgage rate cuts]
