Auswide celebrates record loan book increase

ASX-listed non-major bank Auswide Bank Limited (Auswide Bank) has released its full-year results for the financial year ended 30 June 2023, revealing record home loan growth.

At its FY23 results presentation yesterday (30 August), Auswide Bank stated it had placed an “emphasis on growth” and delivered its “strongest year ever” despite substantial macro-economic challenges and market competition.

The non-major bank said its focus in FY24 would be on further improvement as it looks to achieve “modest growth, NIM protection and control of expenses” as it looks to convert its strong loan book into greater net revenue.

Loan book growth of $1bn

Over FY23, Auswide Bank achieved its “strongest year ever” for mortgage lending, with home loan growth of over 14 per cent, after settling $1.36 billion (up 27.9 per cent compared to FY22).

Its loan book rose by $524 million, from $3.86 billion to $4.40 billion.

The record figure was made up predominantly of housing loans ($4.28 billion), followed by business loans ($66 million) and consumer loans ($56 million).

Auswide Bank stated its achievement was bolstered by “an outstanding year of loan growth with record support from our brokers”.

Auswide Bank’s managing director Martin Barrett stated: “The year saw our operating expenses increase by 13.3 per cent, as we channelled investment into technology to improve customer outcomes and cyber and fraud protection featured strongly.

“Success in the broker space saw an increase to brokerage costs over the year and payroll expenses grew as we continue to expand capacity and build capabilities.

“Expense growth will moderate considerably over FY24 as we focus on releasing other costs across the business.”

Auswide also achieved success through its Private Bank loan book, which showed “very strong growth and momentum” having continued to attract new customers. The Auswide Private Bank loan book increased to $437.7 million, up from $352.2 million in FY22.

The expanded Private Bank service model and “ongoing success in generating loans via the broker channel” increased its capacity to grow.

As well as reporting record loan book growth, its arrears rate was at “a historic low” of 0.10 per cent, down from 0.18 per cent in June 2022.

Approximately $1.7 million of its loan book was over 90 days past due, with $300,000 between 60–90 days past due and $2.4 million between 30–60 days past due.

Auswide aiming for $6bn book

During its results presentation, the bank revealed it was aiming to have a $6 billion loan book by 2025.

It noted, however, that while profitable loan book growth remains a key strategic objective of the bank, it was forecasting inflationary pressures on wages and costs as well as regulatory demands on resources and consultancy expenses, which could be considerable headwinds.

In its results, the bank also suggested NIM (net interest margin) pressure would remain for both funding and lending activities, “reflective of market competition”.

Mr Barrett noted that the second half of the year was “particularly marked by significant deposit and home lending competition which impacted margins across the industry”.

He said: “Profitable growth was challenged as we faced difficult conditions including rising interest rates, maturity of fixed loans and increasing people, technology, cyber, fraud detection and compliance costs.

“Nonetheless, Auswide was able to deliver an underlying NPAT of $25.067 million, an increase of 0.44 per cent on the underlying NPAT of $24.956 million achieved for the year ended 30 June 2022.”

The bank said a shift in the economic environment should raise the NIM pressures as cashback offers provided by competitors will continue to be phased out throughout FY24 .

However, Mr Barrett said the bank was “seeing early signs of improving conditions with the stability of interest rates and settling of aggressive home lending pricing and incentives”.

[Related: 94% of AMP Bank’s resi loans written by brokers]