Shrinking on both sides of the balance sheet, BNK Banking Corp is putting its faith in “higher-margin lending”.
"BNK's strategic shift towards higher-margin lending is delivering results” CEO Allan Savins told the investor call for the half year results yesterday.
“The focus on selective, capital-efficient growth is driving stronger returns, reflected in increased net interest income, improved margins, and higher fee income.
“While lending settlements have declined in line with this strategy, the quality and profitability of the portfolio continue to strengthen. With a solid capital position, BNK is well-placed to sustain its strategic direction and long-term profitability."
BNK’s loan book fell 20 per cent over 12 months while deposits fell by 30 per cent over a year.
Sub-prime loans now comprise 12.3 per cent of BNK’s book, an unusual asset mix for any Australian bank. Prime loans represent 79.7 per cent, while commercial loans account for 8 per cent of the book.
Given the asset mix BNK is fortunate, for now, that only 0.47 per cent of all home loans are in arrears by 90 days or more as at December 2024, compared with 0.57 per cent at December 2023.
BNK said 0.98 per cent of the commercial loan book are in arrears by 90 days or more as at December 2024, compared with 1.41per cent at December 2023.
The bank’s net interest margin lifted materially, to 139 bps from 92 bps a year earlier, with most of the uplift down to improved lending yields, from sub-prime loans, for example.