Report shows Bundaberg thriving in lending and profitability
WHILE the last year has presented plenty of challenges, lending results are in and the data indicates now isn't necessarily a bad time for Bundaberg first home buyers to tap into the property market.
AusWide Bank recently released its full year results for the last 12 months up until June 30, with managing director Martin Barrett saying the business had recorded positive financial outcomes.
"(It) has been a year of outstanding growth in lending and customer deposits, as well as profitability for AusWide Bank," Mr Barrett said.
"We delivered on all our key financial targets with above system loan book growth, an increase in net interest margin in the second half, further reduction in our cost to income ratio and a return on net tangible assets excluding the effects of COVID-19, of above 10%."
The managing director said if the pandemic had not occurred, the figures demonstrate that AusWide Bank would have reached an all time high of profitability.
But despite the challenges presented by COVID-19, the bank managed to implement strategies promptly to assist customers and increased their self-funding ratio to 74.5%, which is more than 300 basis points higher than the previous year's results.
"Our priority remained profitable loan book growth which increased by 4.3% or 1.5 times system in a highly competitive market," Mr Barrett said.
"Despite this, we were able to materially increase our net interest margin through the active management of our funding costs and the over 10% growth we achieved in customer deposits.
"The second half was marked by the COVID-19 outbreak and we responded rapidly to support our customers and provide relief to those who requested support and I am proud that, in most cases, we responded to customers within three days."
Mr Barrett said while their has been talks of doomsday forecasts, the bank had not seen any indication that this was the case.
In fact, he said the lending market in Bundaberg was the best it had been in some time and presented a great opportunity for first home buyers to tap into the market.
"We are seeing record loan growth right now and for the first time in a long time, the Bundy market is really picking up," Mr Barrett said.
"Lots of the local land sales have been finding buyers and there appears to be more activity than what I can recall seeing for a long time, so we're seeing some good growth in lending here, which is fantastic.
"The government's first home loan scheme and low interest rates have been encouraging younger first home buyers to invest in the market, without having to spend thousands of dollars on mortgage insurance."
In addition to the first homebuyer's scheme, the Federal Government's HomeBuilder grant along with the State Government's Regional grant will provide some customers with up to $45,000 worth of potential grant support.
"That's meaningful and when you think about that opportunity in places like Bundy and other regional areas where property prices are lower than they are in bigger capital cities, it does present a really good opportunity for first home buyers and others who can take advantage of those programs," Mr Barrett said.
"Our lenders here in Bundaberg have got some big pipelines and they are under a bit of pressure at the moment, which makes me smile.
"We've always been an integral part of regional communities, particularly Bundaberg and it's great to see after quite some years where things have been relatively difficult, especially since the floods, that the growth we have achieved in Bundaberg has been very positive."
Mr Barrett said AusWide Bank will continue to make contributions to the local economy and compete hard against the bigger banks.
He said he appreciates the ongoing support received from regional Queensland and the Bundaberg community and will still be working to assist customers by providing appropriate levels of support in the coming months.
Highlights in AusWide Bank's full year results include:
•Loan Book up 4.3% yoy to $3.266 billion, 1.5x system growth.
•Net interest revenue up 11.6% yoy to $70.516m.
•Net Interest Margin of 1.97%, up 10 bps; 1.99% in H2 FY20.
•Statutory Net Profit After Tax (NPAT) of $18.504 million, up 7.6% yoy.
•NPAT (excluding the effects of COVID-19) of $20.114m, up 16.9%.
•Customer deposit growth of 10.4% to $2.620bn; 74.5% of funding (FY19: 71.4%).
•Capital adequacy ratio of 12.95% and CET1 ratio of 11.09%.
•Earnings Per Share (EPS) of 43.8 cents, up 3.0 cents or 7.4% yoy.
•Final dividend of 10.75 cps, fully franked, reflects strength of financial result and APRA guidance.