Regional records sub-par mortgage growth

One of the country’s largest regional banks has recorded mortgage growth well below system in the six months to 31 December 2014.

Bendigo and Adelaide Bank’s housing lending growth was 3.2 per cent for the half-year ended 31 December 2014, below system (7.1 per cent).

However, strong business lending growth of 19.7 per cent helped the regional achieve total lending growth of 7.5 per cent, above system (6.8 per cent).

Bendigo and Adelaide Bank managing director Mike Hirst said that while demand for housing loans is solid, the bank is seeing an increase in customers paying down their debt across all portfolios.

“While this impacts the bank's growth, it’s fantastic for our customers as they're building equity and greater financial wealth, particularly as interest rates have fallen,” Mr Hirst said.

“Despite this environment, we’ve strengthened our balance sheet with a strong Basel III-compliant liquidity position and our capital raising activities have been well supported by institutional and retail investors."

Bendigo and Adelaide Bank reported a 4.6 per cent fall in third-party banking over the second half of 2014.

The lender noted that market conditions remain “highly competitive”, especially in the broker channel, adding that its third-party banking contributions were $91.4 million in December 2014, down from $95.8 in June.

Third party contributed 31 per cent of the bank’s after-tax statutory profit of $227.3 million for the six months ending 31 December 2014.

Underlying cash earnings were $217.9 million, a 10.9 per cent increase on the prior half-year result.

Mr Hirst said the bank’s strategy continues to be focused on the success of its customers and communities for the long term.

“It is consistent and we are intent on growing the business profitably, not just driving growth for its own sake,” he said.

Meanwhile, commenting on the Financial Services Inquiry, Mr Hirst said David Murray’s recommendations remain clear.

“The inquiry recognises the environment has changed for many reasons and they’ve taken a balanced approach in identifying the key issues, including the uneven playing field tilted in favour of larger players,” he said.

“We look forward to working with the government and regulator towards an appropriate resolution of these issues in the short term.”

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