An uncompetitive playing field in a competitive lending landscape has impacted mortgage growth for Australia’s fifth largest lender.
Bendigo and Adelaide Bank’s total residential loan growth declined by 15% in the 2015 financial year, according to the non-majors full year results released yesterday.
The non-major’s residential loan portfolio grew by just $1.19 billion over the year to June 2015, down from $1.40 billion growth in the 2014 financial year.
Managing director Mike Hirst says the stunted growth was a combination of capital inequities between lenders and increased mortgage repayments by consumers.
“Having to operate on an uneven playing field impacted mortgage growth and this was compounded by repayment of debt by customers,” he said.
“However, it’s great to see our customers building equity and improving their financial wealth by taking advantage of the current low interest rate environment.”
According to the results, there was a 20% increase in excess mortgage repayments over the year, to $2.28 billion.
The broker market share of residential mortgages also declined over the year, making up 46.4% of Bendigo and Adelaide Bank residential mortgages in FY2015, down from 48% in FY2014.
Meanwhile, the share of mortgages coming through the bank’s retail branches increased over the year, making up 53.6% of the non-major’s residential mortgage portfolio, up from 52% last year.
However, in his results presentation to investors, Hirst says that an increased investment in the broker channel has shown “promising results”.
Looking ahead, Hirst is confident that the bank will be able to improve its competitiveness.
“Pleasingly, the recent APRA
announcements regarding changes to risk weights on mortgages is a positive step toward levelling the playing field and a good outcome for customers seeking greater choice in banking service providers,” he said.
“Our focus on achieving advanced accreditation continues, a significant investment that has already increased our risk management capability and is improving how we can best meet our customers’ needs.”
Bendigo and Adelaide Bank’s statutory net profit after tax for FY2015 was $423.9 million – a 13.9% increase from FY2014. Cash earnings was $432.4 million, up 13.1% from the previous financial year.