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Bendigo and Adelaide Bank reveals increase in resi third-party lending

by Josh Needs12 minute read

The group’s third-party banking lending increased to 53 per cent of the non-major’s residential lending in the 2023 financial year, an increase on last year.

Bendigo and Adelaide Bank Limited yesterday (14 August) reported an increase in its residential lending activities, as third-party banking lending increased to 53 per cent from 52 per cent of the residential activities during the financial year ended June 2023 (FY23).

The release of the group’s full FY23 results revealed there was a $2 billion increase in its residential lending portfolio from FY22–23 – $55.6 billion to $57.6 billion.

Third-party banking lending also increased among the group’s residential lending flow over the second half of FY23, rising from 59 per cent to 66 per cent, as the flow grew from $6.7 billion in the first half of FY23 to $7.0 billion.

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Conversely to the group’s growth in residential lending, it saw a decrease in business lending, down 2.9 per cent ($305.5 million), which it attributed to significant competition from major peers.

Bendigo and Adelaide Bank Limited revealed its statutory net profit after tax grew 1.8 per cent, up $497 million, which it credited to its overall total lending increase to $78.7 billion, up 12 per cent and a 2.4 million increase in customer growth, up 9.9 per cent.

Marnie Baker, chief executive and managing director of the group, said: “This is another strong result. Our focus on returns and execution is paying off and can be seen with our prudent approach to competing in key lending markets and the return of lending growth over the last quarter.

“Our customer numbers continue to grow. They are attracted to our quality products, award-winning service and our digital offerings.”

One of those key lending markets that the group grew in was agribusiness, which saw a 4.5 per cent growth, up $6.3 billion from $6.1 billion in FY22.

The group said the growth in the sector was due to the introduction of a strong broker proposition that has resonated well with the market”.

The results also revealed that the group had improved its arrears results, with those past due 90 days and not well secured down 40.8 per cent from $4.9 million to only $2.9 million.

“While our asset quality remains sound and arrears are at historic lows, we do expect bad debts to trend upwards and move towards longer-term averages of 10–12 basis points over time,” Ms Baker said.

“Borrowers remain in good shape with 41 per cent of loans at least one year ahead on repayments and 31 per cent of loans two years ahead on repayments. Pleasingly we have seen very little deterioration in these numbers with 84 per cent of home loans maintaining a financial buffer.”

Ms Baker also said the results and the group’s ability to “have contained business-as-usual costs in an environment of high inflation”, and having “delivered profitable growth at a time of unsustainable competition for home loans” was a sign of its progress to become a “bigger, better and stronger bank.

Digital future

Looking forward, the non-bank lender said it was focused on investment in digital innovation particularly with its digital mortgages offering, with an aim to grow its percentage of sales by digital channels from 19 per cent in FY23 to 60 per cent in FY24.

Ms Baker said: “We are digital by design and human when it matters. We interact with our customers when and where they want to, in channels that are convenient for them and efficient for the bank.

“The opportunity for us in digital mortgages has never been clearer as customer interest in our digital products continues to grow with this channel now accounting for 12 per cent of total settlements for the second half.”

Possible Suncorp Bank merger

Bendigo and Adelaide Bank Limited’s strong results came after the Australian Competition and Consumer Commission (ACCC) blocked the possible merger between ANZ and Suncorp Bank, with the group previously revealing interest in acquiring Suncorp Bank.

The ACCC said it “considers that a merged Bendigo/Suncorp Bank entity may also be a more effective competitor than either bank is separately”.

[Related: Home loan competition concerns stymie ANZ-Suncorp merger]

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