Lenders are yet to report any significant deterioration in the credit quality of their home loan books, with the latest to release results, Suncorp Bank, detailing improvements in arrears rates and impaired loans. Suncorp Bank reported cash profit of A$256 million for the six months to December – an increase of 28 per cent over the previous corresponding period. Net interest income rose 16.7 per cent to $726 million. The impairment expense was $2 million, unchanged from the June half last year. The net interest margin rose 13 basis points to 2.03 per cent, thanks to “strategic deposit pricing”. Suncorp chief financial officer Jeremy Robson warned that NIM was likely to come under pressure in the June half, as competition for both loans and deposits intensifies. The housing loan book grew 11.7 per cent in 2022 to $52.8 billion, compared with system growth of 6.5 per cent. The value of individually impaired loans in the retail lending book fell 17.4 per cent to $38 million over the year and the value of loans past due by 90 days or more fell 23 per cent to $281 million – down from 54 basis points of gross loans and acceptances to 36 bps. Ninety-one per cent of loans originated during the December half had loan-to-valuation ratios below 80 per cent. The average LVR of the book is 56 per cent. Sixty per cent of home loan borrowers are ahead with their repayments and 30 per cent are ahead by a year or more. With 78 per cent of its home loans originated through brokers, fast turnaround is critical for Suncorp. This is an area it has been working on and yesterday it reported that the average turnaround time came down from 12 working days to three last year. The business loan portfolio grew 6.9 per cent over the year to $12 billion. Individually impaired commercial loans fell 59 per cent to $36 million. Suncorp said its retail and commercial loan portfolios were yet to show signs of stress, despite higher interest rates and inflation. The only parts of the business showing any indication of deterioration were agribusiness and SME lending. Individually impaired agribusiness loans fell from $12 million in the December half 2021 to $7 million in the June half last year but then rose to $8 million in the latest half. Individually impaired SME loans fell from $20 million in the December half 2021 to $14 million in the June half last year but then rose to $17 million in the latest half. The bank left its collective provision unchanged at $180 million. Robson said the bank is paying close attention to the roll-off of fixed rate mortgages into higher variable rates. In the December half 2021 52 per cent of its home loan originations were on fixed rates and in the June half last year 36 per cent were on fixed rates. Just 2 per cent of loans originated in the latest half were on fixed rates. During the latest half $2.8 billion of fixed rate home loans matured. Between $2 billion and $2.8 billion of