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Bank profit falls in low-rate environment

by Staff reporter7 minute read
The Adviser

One Australian lender has recorded a fall in profits in the six months to 31 December last year.

Heritage Bank posted a profit after tax of $16.2 million – down 9.5 per cent on the corresponding period.

Heritage chairman Kerry Betros attributed the result to increased investment in technology and process improvements, as well as continued jobs growth.

“This period saw the start of a significant increase in IT infrastructure that will take place in coming years as we respond to the digital revolution in banking,” he said.

“We are also continuing to invest in jobs at Heritage by creating an additional eight positions in this half-year, after adding a total of 60 new positions in the previous two financial years.”

Heritage enjoyed a strong increase in lending volumes, with loan approvals of $792.97 million for the six-month period – up 20.7 per cent on the corresponding period in 2013.

Lending growth was particularly strong towards the end of the calendar year and has continued into 2015, the bank noted.

In the second half of 2014, Heritage offered a one-year fixed home loan interest rate of 3.99 per cent, the lowest in its 140-year history.

The lender also offered a discount variable home loan interest rate of 4.39 per cent during the six months to December last year. Mr Betros noted that it was one of the lowest available in the Australian market during this time.

“We are targeting increased loan volumes this financial year to help grow this business," he said.

"After a relatively slow start, we are well and truly delivering on that goal with a 30 per cent increase in loan volumes."

[Related: Challenging times for non-major banks]

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