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Online bank BNK Group (BNK) — formerly Goldfields Money and now part of the larger BNK Banking Corporation Limited (BBC)— has reported improved results from both the previous corresponding period and 4Q22.
In its latest trading update for 1Q23, the bank has reported a slew of achievements, headed up by strong growth driven via lending settlements.
In the first quarter of the financial year, it settled $314 million — an increase of 42 per cent from $221 million in 1Q22, it confirmed.
Additionally, BNK has also outlined that it has started implementing its “revised strategy” to shift its focus to higher margin SME lending, with a sales pipeline developed in line with expectations.
The bank continued momentum with its on-balance sheet book, which grew to $1.1 billion — an increase of 71 per cent from $659 million in 1Q22 and the first time it has surpassed $1 billion.
Its total deposits were $1.1 billion at the end of the quarter, an increase of 34 per cent from 1Q22.
As such, its total portfolio of $2.8 billion represents an increase of 13 per cent from 1Q22’s total of $2.5 billion.
Additionally, specialist warehouse settlement volumes through BNK’s alliance with Goldman Sachs were $103 million for the quarter — an increase of 8 per cent from $96 million in 4Q22, it confirmed.
The direct loan-to-deposit ratio of 82 per cent demonstrated the ability to continue to raise deposits in the current environment “which will fund growth”, BNK explained.
Creating an SME sales pipeline
BNK CEO Allan Savin, commented on the quarterly results, stating: “During Q1 FY23, we continued to achieve growth across all key metrics, which increased from both the previous corresponding period and 4Q FY22.
“Importantly, during the quarter we commenced the rollout of our higher margin SME lending offering, creating a sales pipeline for the rest of FY23 and beyond, which again underlines our ability to generate assets,” Mr Savins explained.
As reported in Mortgage Business in September, mortgage manager Better Choice had launched an enhanced range of commercial loan products in an effort to boost lending to the SME sector.
Its parent company, BNK Banking Corporation, had announced this shift in its strategic direction to pivot the lender’s trajectory into SME lending as a part of its next stage of expansion.
BNK Banking accredited this shift due to there being more than 2.4 million SMEs nationwide employing almost 5 million Australians.
At the time, the national manager of sales and strategic partnerships at Better Choice, Paul Bakker, said the SME lending market had become a growth sector ever since COVID-19 restrictions eased.
He added that the lender’s SME product range included offering larger loan amounts of up to $5 million, along with waiving application fees for a limited time.
“Better Choice is well placed to assist SMEs who have done it tougher than most over the past few years in coping with a variety of challenges, which included the COVID-19 pandemic and natural disasters in some regions,” Mr Bakker stated.
“It has been particularly tough for many businesses during the COVID-19 era, with the pandemic impacting trade, staffing and supply chains.
“While there has been government stimulus to help SMEs retain staff and try and weather all the challenges, it can also be necessary to take out a loan to keep the business going and purchase necessary equipment.
“We are targeting residential brokers who are looking to diversify into commercial lending with a dedicated ‘best-in-market’ commercial team to assist brokers clients with a same-day scenario response,” Mr Bakker said.
“We can offer applicants 25-year loan terms, P&I with no annual reviews and just one form of income verification for commercial alt doc loans.
“Our offering is also there to assist brokers seeking finance to grow their business with a broker trail book loan,” he explained.
[Related: BNK report settlement growth of 52%]