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BNK set to break into commercial

The ASX-listed mortgage lender has announced plans to diversify into commercial lending and overhaul its technology offering.

BNK Banking Corporation (BNK) has revealed that it is looking to break into new areas of lending and scale up its technology and product offerings through both natural growth and acquisitions.

BNK chief executive Allan Savins outlined this week that the divestment of aggregation group Finsure (to MA Financial for $151.6 million last year) had helped ensure that the group is “strongly capitalised with significant opportunities for growth”. 

According to the lender, while it will continue to focus on its residential loan portfolio, it is looking to “enhance its lending book by broadening its capability into other complementary lending areas such as commercial lending and other higher margin product categories”.

“Our strategy is centred on delivering improved scalability and profitability,” Mr Savins said in an ASX update. 

“We will pursue both organic and other opportunities to build the scale of the bank and leverage adjacent product categories which are higher margin to deliver enhanced profitability,” Mr Savins said, adding that this would include commercial lending, as well as deposits for small businesses.

The lender CEO stated that the bank intends to “assess acquisition opportunities in complementary asset classes or by partnering with other organisations to deliver scale more quickly”.

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He continued: “Underpinning these strategic initiatives will be a step-change in our technological capability which is intended to simplify and automate our systems to provide a better experience and make it easier for our customers and brokers to do business with us.”

This includes removing manual processing, wherever possible, to reduce costs and improve processing times.

Mr Savins suggested that the bank would also seek to achieve an investment-grade credit rating to “enhance the bank’s ability to enter new markets for term deposits and develop new products”.

The CEO concluded: “BNK is generating strong momentum across its core business which creates a powerful platform for us to deliver the next phase of our growth.

“Our strategy is focused on broadening our capability into higher margin, adjacent product categories which intends to deliver greater scale and profitability. BNK already has a presence in some of these categories, and we now have the focus and investment capability to leverage this position to accelerate our growth in these areas.

“Meanwhile, our investment in improved operating systems and process simplification will deliver improved customer experience and cost efficiency over time.”

The bank expects to unveil a detailed growth strategy following the release of its financial year 2022 results, “in early September”.

The lender has been experiencing strong mortgage growth in the past year, and in May achieved record total settlements of $108.7 million, up 36 per cent on the month prior.

The record reportedly reflected “continued strong growth” in both BNK’s on-balance sheet lending and settlement volumes from its warehouse from Bendigo and Adelaide Bank (which were $71.5 million for the month, up 74 per cent on April figures). 

It also settled $29.3 million through its specialist warehouse (via its alliance with Goldman Sachs) and settled $7.9 million from the preceding white label operating model.

“We are very pleased to deliver record settlements in May which demonstrates the significant potential BNK has to leverage our growth strategy,” Mr Savins continued.

“Having completed the strategic review in early May and confirmed our diversified growth strategy, it is encouraging to see such a strong performance in such a short space of time.

“This is a strong testament to our team and the hard work they have done in delivering record settlements.

“That growth will ensure BNK has a strong finish to FY22 and creates positive momentum into FY23.”

[Related: BNK reports near-record loan settlements]

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