Bank Australia managing director Damien Walsh
Bank Australia has taken the unusual step of breaking out details of its “impact assets” in its 2023 Financial Report and it has set a target for the proportion of this type of asset on its balance sheet.
The bank focuses on four areas of impact finance: climate action; affordable and accessible housing; nature and biodiversity; and First Nations reconciliation.
During the 2022/23 year it grew its Clean Energy Home Loan portfolio by 33 per cent, providing discounted mortgages for buyers of energy efficient homes and for home owners upgrading to renewable energy.
It is a participant in the Victorian Homebuyer Fund and the First Home Guarantee Scheme. It is a partner with Indigenous Business Australia, providing housing finance for First Nations families.
It launched a pilot with the Australia Institute and Boundless Earth to finance the transition of homes to renewable electricity.
It announced that it will stop providing fossil fuel car loans from 2025.
It funds these activities through the issue of sustainability bonds and impact term deposits. It issued A$450 million of bonds during the year. The impact term deposit raised $29.7 million.
The bank’s impact assets grew 28.6 per cent to $1.8 billion, while total assets grew 8.2 per cent to $10.5 billion. Impact assets make up 17 per cent of total assets and the bank’s goal is to increase the proportion to 20 per cent.
Overall, the bank did well. Profit grew from $34.4 million in 2021/22 to $52.3 million in the year to June 2023 – a record result that was driven by a higher margin.
The net interest margin rose from 1.73 per cent to 2.02 per cent. The bank said the big margin increase was likely a one-off and profits would return to lower levels.
The cost-to-income ratio fell from 70.1 per cent to 66.2 per cent.
Deposits rose 4 per cent to $7.7 billion. Loan origination dropped from $2.6 billion in 2021/22 to $2 billion in the year to June, while the loan book grew 9.5 per cent to $8.1 billion.
Impaired loans fell as loans restructured during COVID returned to performing status. The impaired asset ratio fell from 27 basis points to 18 bps. There was no credit impairment charge.
Bank Australia managing director Damien Walsh said getting to $10 billion of assets was a milestone for the bank.
“It is an important moment in our bank’s history and provides a sound footing for future growth,” Walsh said.