Martin Barrett, CEO of Auswide Bank. Pic Jono Searle.
Martin Barrett, CEO of Auswide Bank. Pic Jono Searle.

Bundy lender targets Big Banks’ Hayne pain

BUNDABERG-based Auswide is targeting the "reputational damage" suffered by Big Bank rivals in the recent royal commission, saying it presents a lending opportunity.

The 21-branch lender says additional staff have already been hired in areas such as lending and more might be brought in following fallout from the banking inquiry. Commissioner Kenneth Hayne handed down a blistering criticism of Big Banks among its findings this month.

"(We're) looking to try and take advantage of the environment," Auswide managing director Martin Barrett told The Courier-Mail.

It marks another reaction in the sector to the royal commission: Big Bank NAB disposed of its chairman and MD, Brisbane-based Suncorp told investors last week that regulatory costs had bumped up considerably, while some customer-owned outfits have noticed an increase in customers looking to switch.

One big impact could be an inquiry recommendation banning commissions for mortgage brokers, which Auswide use for almost 60 per cent of loans. Mr Barrett said the bank would have to wait and see what happens with such recommendations.

His comments come as Auswide unveiled a 0.3 per cent rise in profits from ongoing business in the past six months to $8.5 million. Part of the profit tightness was blamed on increased spending on technology and staffing; an extra eight employees have been hired to the 260-strong workforce.

Margins were squeezed thanks to increases in funding market costs. Dividends were flat at 16c but the loan book grew 4.9 per cent, on an annualised basis, between June and December last year to $2.98 billion.

Mr Barrett agreed with sector sentiment that slowing sales were impacting the lending market. Yet while NSW and Victoria were tougher, he argued "we're still seeing good opportunities in Queensland" including in regional areas.

"There is a growing level of confidence there," he said.

Suncorp on Thursday also revealed profit results, which showed its banking and wealth arm profits fell 1.1 per cent to $183 million.

Analysts at Citigroup said bank conditions remained tough "with rising funding costs and (operational expenditure) growing due to increased regulatory costs". While internal cost-cutting should partly offset these pressures, the analysts said they forecast flat profit earnings for the banking and wealth division for the full year.

Suncorp's accounts noted that growth in home lending was also impacted by "longer than normal servicing times across the broker network, due in part to increased focus on lending serviceability criteria and the adoption of additional verification requirements".

It had $47.98 billion worth of home loans on its book as of December.

Commercial lending had risen for Suncorp, with jumps of 9.9 per cent in the property investment segment to $2.465 billion between June and December last year. Construction and development rose 15.6 per cent to $666 million.

Suncorp, which was stung by bad development loans in the global financial crisis, maintained that most development finance loans now were under $20 million.

A strong point was a low level of bad debts, with Suncorp only taking a $7 million impairment hit in the latest results. Impairment losses were expected to remain below historical levels, the accounts said.


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