BNK is one Aussie bank in the red
Reporting the first year of results including a full year for its Finsure acquisition, BNK Banking Corp’s 2019/20 financial report makes clear that mortgage aggregation is what now drives the business.
Finsure contributed A$22.3 million of revenue and $9 million of pre-tax profit to the group result.
Finsure, which services 1740 brokers, increased loan settlements by 23 per cent to $15.6 billion and increased its loan book by 19.4 per cent to $45.5 billion.
The mortgage management division, Better Choice Home Loans, contributed $6.5 million of revenue and $200,000 of pre-tax profit.
Better Choice loan settlements fell from $578 million in 2018/19 to $448.3 million in the year to June.
The ADI, BNK Bank, contributed $6.7 million of revenue and made a pre-tax loss of $1.7 million.
The loss was the result of the bank increasing its liquidity buffers and “a momentary pausing of lending”. The liquidity buffers are being wound back and lending resumed in June.
Bank loan settlements rose from $74.5 million to $129.1 million. Total group loan balances grew from $40.6 billion to $48.1 billion.
Group net profit was $5.23 million – up from $3.6 million the previous year.
The group applied a 14 basis point overlay to loan loss provisions in response to COVID-19, taking the provision to 27 bps of loans.
As of August 20, 4.5 per cent of the on-balance sheet portfolio was under COVID-related arrangements – down from 5.6 per cent in May.
The group’s strategy is to integrate its divisions so that the Finsure provides a sales channel for Better Choice Home Loans and BNK Bank.
Better Choice and BNK Bank are operating off the same mortgage origination platform.
Better Choice is currently supported by six lenders but the group is working on the establishment of a warehouse facility that will give it lower funding costs and a higher margin.
It also plans to make BNK Bank branchless, offering a Bank@Post service instead.