After selling its mortgage aggregation business Finsure earlier this year, BNK Banking Corporation plans to develop an SME lending business in pursuit of growth and higher margins.

BNK chief executive Allan Savins outlined a three-year plan at an investor presentation last week, including the launch of business term deposit and cash management accounts this year, followed by business transaction accounts and full-service business banking and lending.

Savins said BNK already has a commercial underwriting team. Since 2019, the bank has been underwriting and servicing a commercial funding program on behalf of a third party, with around A$200 million settled to date.

The bank is aiming for $100 million in commercial settlements this financial year.

BNK bought Finsure, an aggregator servicing more than 1700 brokers, in 2019 but three years later it sold it to MA Financial Group.

The sale price was $152.2 million and in May the company announced that it would return $60 million in sale proceeds to shareholders. It has already returned $40 million.

The $72.2 million gain on the sale was recognised in the June half-year and was responsible for the group’s net profit of $59.8 million for the year to June. BNK recorded an underlying loss of $6.9 million.

A big development for the group was the launch of its first securitisation warehouse in May last year, funded by Bendigo and Adelaide bank and Blackstone. A second securitisation warehouse was launched last August, funded by Goldman Sachs.

Total lending settlements grew 85 per cent to $1.04 billion. The loan book grew 8 per cent to $2.7 billion.

Net interest income from continuing operations rose 66 per cent to $12.9 million

The bank’s net interest margin fell from 1.67 per cent in 2020/21 to 1.26 per cent in the year to June. Savins said the bank is targeting a NIM above 2 per cent with the introduction of SME lending.

The loan impairment expense rose from $384,000 in 2020/21 to $843,000 in the year to June.