‘One of the better performing banks in Australia’ is one way to look at Auswide Bank.
This was the central message of the investor presentation explaining the bank’s 2022 full-year financial results, and it’s tempting to agree.
The bank’s return on equity was 9.8 per cent over the year to June 2022. Industry returns have wandered over the years (and crashed over the long run), with APRA putting sector ROE at 7.6 per cent.
For the mish-mash of ADIs APRA rolls up as ‘other banks’ the average ROE is 6.2 per cent.
The Auswide return on assets was 0,6 per cent against a sector average of 0.5 per cent.
Over the full year Auswide reported a statutory net profit of A$26.1 million, up from $24.2 million.
Its net interest margin softened to 1.94 per cent from 2.00 per cent, while the cost to income ratio also shifted in the wrong direction, to 61.1 per cent from 60.0 per cent.
The FY2022 cost to income ratio “reflects strategic investments” and recent priorities are producing results.
“We focus on where we make our money, and getting the right priorities there,” Martin Barrett, the bank CEO said.
The private banking division, focused on professionals, is beginning to produce double digit growth in Melbourne and Sydney to complement the more parochial breakout story underway in Brisbane and south-east Queensland.
Judicious pricing of deposits is another topic at top of mind for Barrett, with Auswide setting out to wholly repay the $150 million it drew down via the Term Funding Facility with deposits, rather than wholesale funding.
“We want to bring sanity back in the deposit market,” Barrett said.
“At the moment there is a level of insanity out there, you see rates of 3 per cent on 12 month term deposits.”
Auswide’s best carded offer for this term is 2.45 per cent and pays a shade less than 3 on terms of 48 and 60 months.
With close to 60 years of history behind it, a strong culture and an engaged workforce centred on the Queensland sugar city Bundaberg, Auswide are better positioned than many disruptors.
Auswide are a natural for the progressive industry roll-up for the congested and over-serviced banking industry in Australia.
Barrett said the bank engaged with “a couple” of mutual banks and credit unions over the last year, though it didn’t sound like anything is on the horizon.
Refuting suggestions the bank had been in the mix during the recent sales process for Suncorp Bank, Barrett, like all Queensland-centric ADIs sees opportunity whenever ANZ formalises this takeover next year.
“Suncorp customers won’t be overly happy with a bank like ANZ.”