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Non-major reports $2.2bn drop in home loan settlements

Non-major reports $2.2bn drop in home loan settlements

A regional bank has revealed its full-year 2018 financial results, reporting a fall in residential mortgage settlements amid “challenging” conditions.

According to Bendigo and Adelaide Bank’s full-year 2018 financial results (FY18), the total value of reported home loan settlements fell by $2.2 billion, from $15.1 billion in FY17 to $12.9 billion in FY18.

Bendigo and Adelaide Bank’s managing director, Marnie Baker, made note of “challenging” market conditions, making reference to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry and the changing regulatory landscape.

“There’s no doubt, it continues to be a challenging environment for Australian banks, with the effects of the royal commission into misconduct casting a shadow across the industry.

“[With] increased regulatory oversight and a renewed debate around culture, trust in the banking sector is at an all-time low.

“Its a subdued banking sector, with declining asset growth, diminishing bank margins and increasing costs as banks seek to bolster their compliance functions.”

However, despite recent softening in credit and housing market conditions, the bank increased home lending flows in 2H18 by 4.7 per cent, from $6.3 billion in 1H18 to $6.6 billion.

“Weve seen improved flows through our local connection retail business and our third-party mortgage businesses, with housing lending growth up by 4.7 per cent in the half,” chief financial officer Travis Crouch said.

The lenders overall residential mortgage portfolio now totals just under $40 billion.

Ms Baker added that she was satisfied with the bank’s performance in light of weakening market conditions, rising costs and stiffer competition.

“In an environment where were seeing aggressive mortgage pricing, low volumes, tightening of lending standards and increasing funding costs, margin and volume of both deposits and loans were well managed throughout the year,” Ms Baker said.

The managing director also noted that she was expecting the bank to record “above system” growth in FY19. 

“We believe we should be at least system, if not better. Depending on where system settles, well be committing to exceed or be at least the same as system,” the MD said.

Despite weakening market conditions, Ms Baker said that the bank was “poised to take advantage of the opportunities ahead”.

On the whole, Bendigo and Adelaide Bank reported a statutory net profit after tax (NPAT) of $434.5 million, with underlying cash earnings of $445.1 million.

[Related: Bank bolsters mortgage portfolio by $2.8bn]

Non-major reports $2.2bn drop in home loan settlements
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