Heritage Bank’s pre-tax profit for this six-month period was $37.59 million, up by 25.6 per cent on the $29.92 million earned over the same period in the previous year.
Profit after tax was $26.27 million, up by 25.8 per cent on the corresponding period in the previous year.
However, loan volumes totaled $800.9 million, down by 29.1 per cent on the same six-month period.
Heritage CEO Peter Lock said that the bank’s lending volumes were adversely affected by APRA’s imposition of caps on investor and interest-only lending.
“We had to reduce lending volumes in those areas to remain within the cap, even though the primary targets of the measures were the big bank,” Mr Lock said.
“The impacts on us were a perfect example of the Productivity Commission’s draft report into competition in the banking sector, which found that APRA’s macro-prudential intervention in the home loan market was too blunt and did not take into account impacts on competition or differences between mutuals and the big banks.
“Heritage has remained well under those APRA caps and is now competitively placed to target stronger lending volumes.”
He also said that Heritage had tapped into longer-term wholesale funding markets to take advantage of favourable pricing, lessening the reliance on retail deposits and contributing to the positive profit outcome.
Heritage maintained its standing as the largest customer-owned bank in Australia in this period, growing its total consolidated assets by 1.5 per cent to $9.52 billion.
Prudential ratios were also strong, with the capital adequacy ratio up from 13.44 per cent at 30 June 2017 to 14.31 per cent at 31 December 2017, and the liquidity ratio up from 15.43 per cent to 16.45 per cent in the same period.
Mortgage Loan arrears greater than 30 days sat at just 0.57 per cent of the total mortgage portfolio balance.