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Bank bolsters mortgage portfolio by $2.8bn

Bank bolsters mortgage portfolio by $2.8bn

A non-major lender has reported a 6.2 per cent rise in home lending, despite “high levels of competition, aggressive pricing across the industry, and slowing system growth”.

Suncorp yesterday released its full-year 2018 (FY18) financial results, reporting 6.2 per cent growth in home lending in the year to June 2018, despite “moderated” growth in the second half of FY18 “in response to market conditions”.

The lender’s mortgage portfolio has risen to $47.6 billion, up from $44.8 billion in FY17, with Suncorp noting that the growth was 1.2 times above system.

In a briefing to investors, Suncorp CEO Michael Cameron said that the results are positive given “high levels of competition, aggressive pricing across the industry, and slowing system growth”.

Home lending breakdown

Suncorp’s results also revealed that owner-occupied home loans made up 72 per cent of the bank’s mortgage portfolio, up from 70 per cent in FY17.

The share of investor home loans fell from 30 per cent to 28 per cent over the same period, with Suncorp reporting investor lending growth of 4 per cent in FY18, well below APRA’s former 10 per cent cap.  

Additionally, the portion of interest-only loans fell by 6 per cent in FY18, from 28 per cent to 22 per cent, which the lender said was reflective of the 18 per cent share of new loans settled with interest-only repayments in FY18, 12 per cent lower than APRA’s 30 per cent cap.   

The share of home loans distributed through Suncorp’s broker network also grew in FY18, from 66 per cent to 67 per cent.

Profits dip

Despite reporting overall lending growth of 6.1 per cent ($58.7 billion portfolio), profits underlying Suncorp’s banking and wealth division dropped by $21 million, from $396 million in FY17 to $375 million in FY18.

Moreover, Suncorp Group’s total net profit after tax (NPAT) fell by 1.4 per cent, from $1.07 billion in FY17 to $1.05 billion in FY18.

According to the non-major, its profit loss was attributable to “accelerated investment of $146 million in the marketplace”, and a “four-fold increase in regulatory costs to $54 million”.

Suncorp on royal commission

Mr Cameron also said that Suncorp is taking note of developments from the Royal Commission into Misconduct in the Banking, Superannuation, and Financial Services Industry.

The CEO claimed that he is confident that the inquiry’s findings, the first of which are set to be released next month, would result in better customer outcomes.  

“I’m sure every financial institution is taking lessons from the current royal commission,” Mr Cameron said.

“We cannot yet know the extent of regulatory changes that will result from the commissioner’s findings and recommendations.

“What we do know is that the current regulatory environment continues to sharpen the focus on the importance of culture and behaviours in driving positive outcomes for customers.”

[Related: CBA confident of lending rebound following $4bn drop]

Bank bolsters mortgage portfolio by $2.8bn
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