Retail deposits matching asset growth

A single, dodgy loan to some directors of Octaviar is the only real blemish on the credit quality of St George as the credit crunch approaches its first anniversary.

In the mortgage book credit quality is improving. All loans 90 days or more past due decreased $15 million for the year to $226 million, with residential 90 day arrears decreasing by almost a fifth over 12 months to $137 million.

The bank, for once, managed to match system growth on residential lending, at
11.2 per cent (and taking the book to $72.7 billion). Fifty six per cent of the book remains in New South Wales (where lending growth rates are less than two thirds the national average).

The business mix in St George's home loan flows changed over the last six months, with reverse mortgages creeping up toward one per cent of new loans, and almost the same as discounted home loans, which was once the dominant part of the bank's mortgages but is now down to only one per cent.

In other consumer segments, personal lending decreased slightly to $5.3 billion while credit cards increased 16 per cent to $1.6 billion.

Marketing of credit cards to bank customers is slowly bearing fruit. About one customer in four now has a credit card, up from one in five two years ago.

On the liability front St George said "term and other deposits" increased 16 per cent to $51 billion over the twelve months to March.

Chief executive Paul Fegan stressed the achievement, which is largely a feature of altered flows of savings thanks to the credit crunch, though one exploited by the bank.

"Retail deposit growth is now running at the same rate as our asset growth. That is, the retail bank is actually match funded," Fegan said.

"This is the first time this has occurred in over a decade at St George, and we expect that to continue".