Monday (August 15), Bendigo and Adelaide Bank Limited (Bendigo) released their results for the full year ending June 30, 2022, revealing that its loan portfolio grew by 7.7%.
The banking group revealed that residential loans increased by 11%, with strong demand coming from the third-party channel.
According to the results, its residential loan portfolio stood at $26.8 billion at the end of June 2022, with a third-party banking portfolio at $29.2 billion.
As such, the broker channel is now responsible for the majority of the group’s loan portfolio – with 52% of the portfolio coming from this channel. As of June 2021, 49% of the book came from non-direct sources.
Indeed, the third-party channel has increased its share of streams over the past year, the results show. More than half (56%) of residential mortgages came from the third-party channel in the first half of fiscal 2022, dropping to just under two-thirds (64%) in the second.
While Adelaide Bank has traditionally been the only brand operating in the third-party channel, Bendigo Bank (which has only been direct) has been move to break into the brokerage channel, too.
Growing share of owner-occupiers
The results also showed that 95% of the banking group’s portfolio is devoted to homeowner loans (on the repayment of principal and interest, with 57% on variable loans and 43% on fixed loans.
Bendigo and Adelaide Bank saw an increase in the proportion of homeowner loans entering the bank overall, with 77% of new business being owner-occupied in the second half of the year, up from 71% in the first half.
Its business loan portfolio, however, fell during the year, from $8 billion in June 2021 to $7.8 billion in June 2022. Commitments also fell during the year, falling to $9.4 billion.
The SME segment is also down, with the portfolio dropping $400 million from $6.2 billion to $5.8 billion at the end of June 2022, but the agribusiness loan portfolio remained stable at approximately $6.3 billion.
The drop comes after the bank moved to consolidate its rural banking and merchant banking activities into a single division earlier this year.
Digital mortgage product receives first applications
Looking ahead, the bank reported that it had soft-launched its new digital mortgage, Up Home, in July 2022 – leveraging the Tic:Toc platform.
Announcing the financial results, CEO and Managing Director Marnie Baker said, “Our journey to becoming a bigger, better and stronger bank continues. We have reduced the number of core banking systems and technology applications, while our new digital mortgage offering, Up Home, has received its first applications,” Ms. Baker said.
The CEO also noted that the group has made progress in its transformation strategy, focused on digitizing and streamlining the business, after the $116 million acquisition of software developer Ferocia during the first half.
She said: “We have completed the acquisition of Melbourne-based fintech Ferocia, which has allowed the Bank to consolidate ownership of Up – Australia’s highest-rated banking app – and deliver its flagship product. digital home loan, Up Home.
“With more than 500,000 customers and over $1 billion in deposits, Up is empowering a new generation of savers and adding an important demographic to the Bank’s customer base at a low acquisition cost.”
She also reported that the bank had “more cloud applications, more reused APIs, and more digital customers,” which helped improve turnaround times.
The bank reported that while the median decision time for broker loans was around 13 days in fiscal 2022 (based on May 2021 Broker Pulse figures), its ambition was to bring them down to less than 10 days. one day during fiscal year 24.
“Our decision time for home loans has improved and we continue to consolidate the number of providers we use and improve our risk management frameworks and capabilities,” Ms. Baker said.
“Our BEN Express digital home loan offering isn’t just a goal. It’s in the market today. Our BEN Express product, powered by the Tic:Toc home loan approval platform, has settled over $50 million in loans in FY22. We expect this to increase significantly over the next 12 months.
Overall, the banking group said total revenue for the year rose, rising 0.4% to $1.7 billion, while operating expenses fell 1.1% to $1.0 billion.
Cash profit for the year rose 9.4% to $500.4 million, with statutory net profit down 6.9% to $488.1 million due to “unrealized real estate revaluations in the Homesafe Wallet”.
“Our journey to become a bigger, better and stronger bank continues. We have reduced the number of core banking systems and technology applications, while our new digital mortgage offering, Up Home, has received its first applications,” Ms. Baker said.
“The external environment has become more complex, which has sharpened our focus and focused our efforts. We will continue to manage costs diligently, strengthen the returns we derive from our investments and improve returns for shareholders.
“While our strategy and vision remain the same, as we enter a new fiscal year, we will continue to strengthen our focus on returns, execution, sustainable growth and capital generation while driving the business forward. supporting and enhancing our customers’ experience.”
Ms Baker commented: “While customers and the community will always be our central focus and a unique point of difference for us, we recognize that we need to improve our overall returns.
“What we were hoping for would be a relatively soft economic landing in the wake of COVID has turned a little bumpy, as we face growing inflationary pressures, a tight job market, rising wages and general global uncertainty.
“Increases in Reserve Bank cash rates are beginning to impact property values in some markets and we can expect credit growth to slow and competition to remain intense,” he said. she declared.
“We will be aggressive in our response to these conditions as we strive to better meet the needs of customers, including those who find the environment difficult, shareholders and other stakeholders.
“We will focus more on factors within our control, such as our cost base and our continued judicious use of shareholder capital.
“Our focus on these areas has never been clearer and our strategic imperatives greater. We remain, as we always have been, a bank of hearts and heritage, and we are united in our goal to contribute to the prosperity of the community, not to depend on it,” concluded Ms. Baker.
[Related: ‘Fierce competition’: Bendigo and Adelaide Bank manages mortgage growth]