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The ASX-listed lender has increased its book by 13 per cent after acquiring $150 million worth of high-margin residential mortgages from a warehouse financed by Goldman Sachs.
BNK Banking Corporation Limited (BNK), which bills itself as “the brokers’ bank with over 40 years of experience”, first established an uncommitted $500 million specialist residential securitisation warehouse with Goldman Sachs in 2021.
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It has now bought a $150 million portfolio of high-margin residential mortgages from the warehouse, to which BNK performs the origination, underwriting, and servicing roles.
The maximum loan balance is $2.36 million, the maximum loan-to-value ratio (LVR) is 80 per cent, and the weighted average current LVR is 64.4 per cent.
According to the lender, the transaction will increase BNK’s loan book to $1.3 billion (an increase of 13 per cent) and increase its net interest margin (NIM) in the second half of financial year 2021.
Speaking of the deal, BNK chief executive Allan Savins commented: “The acquisition of these higher-margin residential mortgages provides BNK with an added impetus to achieving our goal of delivering a positive cash NPAT in Q423.
“This transaction will also free up BNK additional funding capacity to the specialist warehouse and will be revenue accretive for the bank.”
BNK to focus on SME lending
While the lender has been building its resi book, it has recently started a pivot to SME lending.
In January, the lender revealed that its loan settlements fell to $174 million (down 44 per cent) in the second quarter of the financial year 2023 (2Q23) but flagged that this drop was partly due to a competitive environment and partly due to its move into commercial lending.
The largest drop was from on-balance sheet settlements, which were down from $175 million in the first quarter to $59 million.
This was followed by a fall in settlements in its specialist warehouse (funded via its alliance with Goldman Sachs), which were down from $103 million to $67 million over the quarter and represented a decrease of 30 per cent from $96 million in Q2 FY22.
Speaking at the time, Mr Savins said the results reflected the group’s strategy to pivot to higher margin SME lending, preserving capital for higher margin assets.
“We launched this strategy in Q1 FY23 with an aim of achieving 15–20 per cent in commercial property settlements this financial year and thanks to the strong pipeline, we are well on track to achieve this goal,” he said.
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