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The ASX-listed mortgage lender has announced plans to pivot into “higher margin” commercial lending.
BNK Banking Corporation reported strong mortgage growth of $984 million in its financial year results 2022, which was up from $537 million last year (FY21) and $285 million in FY2020 – an increase of 86 per cent.
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Of the bank’s $310 million in settlements, its prime warehouse settled $23 million (to $208 million) through Bendigo and Adelaide Bank, while its specialist loan book grew $95 million, to $266 million (via its alliance with Goldman Sachs).
BNK's white label product dropped to $1.4 billion (compared to $1.9 in FY21), however settled $61 million for the year, and its banking arm settled $130 million in loans, to $777 million.
Chief executive Allan Savins said building on its “excellent growth” across its loan book, it plans to diversify into commercial lending and tap into the growing opportunity in Australia.
“Building on this success, our plan is to achieve 15-20 per cent commercial secured settlements of our total volume projections for FY23,” Mr Savins said.
In addition to optimising the usage of its prime warehouse for residential lending to manage capital, and its longer-term strategy of “building a $3 billion loan book”.
The group received a net profit after tax of $59.8 million, compared to $5.6 million the year before, marking a 956.5 per cent increase, which was primarily driven by the sale of Finsure.
The sale of aggregation group Finsure (to MA Financial for $151.6 million last year), was “strongly positioned” to grow, with a 47.5 per cent increase in available capital.
On 3 May 2022, the board announced an intention to return $60 million in sale proceeds to shareholders, with an initial $40 million returned to shareholders. The board intends to pay the remaining approximately $20 million as a capital return upon approvals.
The lenders new model will include full doc and alternative term loans, commercial SMSF lending, lease doc and the broker trail book.
Given the rising rate environment and increase in property prices, it reported the average loan size increased from $325,000 to $340,000 year-on-year.
In addition, fixed rate loans decreased, making up 36 per cent of its portfolio, with expectations that it will reduce a further 13 per cent over FY23 and 57 per cent over FY24.
It also reported 36 per cent of its customers are 12 or more months ahead on their loan repayments and 28 per cent were 25 or more months ahead on their loan repayments.
While the bank plans to diversify its portfolio, it has indicated that residential home loans remain the cornerstone of its business.
The lender has also announced plans to scale up its technology and product offerings through both natural growth and acquisitions.
[Related: BNK set to break into commercial]
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