David Marshall, CEO, Defence Bank
Defence Bank navigated the challenges of the past year successfully, reporting record lending in the year to June, as well as strong growth in deposits and income.
Net interest income rose 10.2 per cent over the year to A$66.8 million. Total income rose 3.7 per cent to $75.2 million.
Expenses rose 11.4 per cent to $54.5 million. Net profit fell 13.1 per cent from $16.6 million in 2021/22 to $14.5 million in the year to June.
The 2021/22 result included a net gain of $3.7 million from the revaluation of the bank’s investment in Cuscal. On an underlying basis, profit was up.
The bank advanced $806 million in new funding, a record, and its portfolio of loans and advances grew 9.5 per cent to $2.9 billion.
The provision for impairment was $866,000, down from $1 million in 2021/22. It wrote off $97,000 of bad debts.
One of the distinctive features of the bank’s business model is that it does not use brokers for loan sales. Defence Bank chief executive David Marshall said the bank has a strong team of mobile lenders.
Marshall said: “We want to be a real relationship bank. If you go through brokers you lose connection with members and miss opportunities.”
He said the strong growth in the loan portfolio over the year is a good indication that the strategy works.
The bank has more than 78,000 members, adding close to 6000 new members in the year to June. Marshall said around 80 per cent of members are Australian Defence Force personnel and their family members.
He said one of the bank’s strong products is its car loan. Young people entering the defence forces usually look to buy a car not long after they start earning money and for many that is the beginning of their relationship with the bank.
“If we do a good job looking after young recruits we have a good chance that they will come back and talk to us when they are looking for a home loan.”
In addition to its mobile lenders, Marshall believes the bank’s new digital loan platform is another strong resource. The platform is already being used to originate car loans and will soon be used for home lending.