Arrears are at an historic low, it says
Strong home loan growth has resulted in a 7.3% rise in the value of Auswide Bank’s loan book over the 2022 financial year.
The bank has posted a statutory net profit after tax (NPAT) of $26.1m over the year to June 30, 2022, up 8.2% on the 2021 financial year.
The value of all loans reached $3.8bn, an annual increase of 7.3%. The value of all loans includes $3.7bn of home loans (direct and through its broker channel), $53m of consumer lending, and a small business banking portfolio of $82m, the bank confirmed.
Approvals were up 10.3% compared to FY21, the bank said in the results. As of June 30, 2022, arrears were 0.18% of its loan book, a “historic low” and “among the best across the industry”, the bank said.
Profitable loan book growth remains a key strategic objective, the bank said. This would be achieved through consistent management of funding lines, and of asset and deposit pricing to ensure growth is reflected in the net interest revenue and profitability.
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Auswide Bank managing director Martin Barrett (pictured above) said following years of “record profit growth,” the bank was able to continue this trend in FY22.
Private bank, government homebuyer schemes, fixed rate products and enhancements to its broker offering all underpinned growth over the year, he said.
The 8.2% annual increase in NPAT profit was driven by strong home loan growth and margin management, said Barrett. Throughout the year, the bank continued to expand broker distribution and its private bank capability.
“We are more nimble than our bigger competitors and we are able to quickly seize opportunities in the competitive banking landscape, including the roll out of new technologies which have provided new distribution possibilities and efficiency benefits,” Barrett said.
Despite increasing inflationary pressures, the Queensland economy and housing market remained active, he said.
“Official cash rate increases will provide support to our NIM [net interest margin], despite rising funding costs. Our successful strategy of profitable loan growth will continue,” Barrett said.
He said the results were supported by investment in the bank’s digital and lending capability, including improvements made to the processing of loans.
“We have a strong focus on improving the cost per loan in a highly competitive market and are well placed to continue our profitable growth agenda.”
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The bank continues to invest in increasing its capability in the mortgage broker space, Barrett told MPA.
“Recently this has been put under pressure as we have experienced a significant lift in broker loan flows to Auswide Bank,” Barrett said.
The bank is committed to achieving a consistent and reliable experience for brokers, which he said would be boosted by several key initiatives. These include the release of a broker website and improved loan tracking, improvement in turnaround times through investment in broker support and loan processing staff, and a review and enhancements to its loan origination system.
The bank would also continue its journey of improving upfront valuations and VOI requirements, and improve understanding of its products, including offset available on fixed rate loans, with the aim of offering greater flexibility in these products than most of its competitors, Barrett said.
“The broker channel has been a significant part of Auswide Banks ongoing success, and we want to improve to ensure, in a very competitive space, that we earn the right to support customers that our broker partners are finding solutions for.”
Highlights for FY22 include:
- Statutory net profit after tax (NPAT): $26.132m, up 8.2% on FY21.
- Loan book value: $3.85bn, up 7.3% on FY21.
- Approvals up 10.3% on FY21.
- Arrears: 0.18% of loan book (as of June 30).
- Net interest revenue: $82m, up 5% on FY21.
- Net interest margin (NIM): 194-basis points, down six-basis points on FY21.
In the first half of FY23, the bank said it expected to deliver loan book growth of 1.5 to 2 times system.
