Regional bank records 70/30 rates split

Bendigo and Adelaide Bank has seen the proportion of its variable home loans drop and the number of fixed-rate loans increase in the 12 months to June 30.

Variable loans now represent 70 per cent of the regional bank’s loan book, down from 79 per cent in 2012/2013, while fixed loans increased from 21 to 30 per cent.

Overall, the lender recorded a significant increase in the number of new loans approved in the year to June 30.

Released yesterday, the bank’s full year results reveal a 16 per cent increase in total loan approvals, with new residential loan approvals up 16.6 per cent from the previous year, while non-residential loans increased by 14.9 per cent.

Income from the lender’s third-party banking was $204 million, up 22.1 per cent from last year’s segment earnings of $167.1 million.

Bendigo and Adelaide Bank more than halved its third-party banking credit expenses by 53.6 per cent from $26.9 million to $12.5 million.

Total third-party banking assets at 30 June 2014 were $17.8 billion, up 6.6 per cent.

Brokers generated 48 per cent of residential lending, up from 46.8 per cent the previous year.

First home buyers represented 7.1 per cent of all residential lending – down from 8.29 per cent in 2012/2013.

Owner-occupiers increased their share of residential lending from 64.4 to 65.1 per cent, while the investor share decreased from 35.6 to 34.9 per cent.

The average loan size jumped from $187,000 to $198,000 – an increase of 5.9 per cent – while average LVRs declined from 62.49 to 62.43 per cent.

Mortgages with LMI fell from 40.3 to 37.9 per cent and low-doc loans fell from 5.18 to 3.92 per cent.

The lender’s after tax profit of $372.3 million was the result of disciplined management of its margin and balance sheet, according to group managing director Mike Hirst.

“A five basis point increase in net interest margin is testament to the bank’s value proposition in what is a highly competitive environment,” Mr Hirst said.

“We do not pursue growth for growth’s sake,” he said.

“The bank is proud of its community bank model and the resultant sharing of financial reward to communities, customers and shareholders.”

Mr Hirst said Bendigo and Adelaide Bank had taken further significant steps to strengthen its capital base and funding capacity.

“Our capital raisings were well supported by institutional and retail investors,” he said.

“Investors recognise that our strategy is consistent and focused, and we are intent on growing the business profitably.”

 

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