Bank Australia's success in securing younger customers

Bank Australia's success in securing younger customers
Bank Australia's success in securing younger customers

Bank Australia’s 2016 financial results released today show strong profitable growth with a net profit after tax of $22.6 million.

It came with overall asset growth of 13 percent taking the bank’s assets to more than $4 billion with a trend toward younger customers.

“We’ve also had significant growth in new customers, particularly from our target market of socially aware consumers and we have decreased the average age of customers by attracting younger customers to the bank,” the managing director Damien Walsh said.

He advised the bank’s decision to forgo a portion of profit this year to focus on investing in the bank’s brand and technology had delivered strong business growth.

“We achieved deposit and loan growth both well above system which is pleasing in the current low interest rate and competitive environment,” Walsh said.

Customer deposits grew by 12 percent and customer loans by 21 percent.

“Our profit sees the bank grow customer owned reserves by $24 million to $435.9 million; and with a very strong capital adequacy ratio of 18.66 percent we are well positioned to grow and provide customers with highly competitive prices, products and services in the years to come.

“The result represents a return on assets of 0.59 percent, which is healthy particularly given that we’ve made some significant investments in our technology, people and brand over the past year,” Walsh said.

Each year Bank Australia commissions CANSTAR to compare its pricing (rates and fees) on deposit and loan products with the average advertised rates of the four major banks. Over and above the $22.6 million of after tax profit, the bank returned pricing benefits in the amount of $33.2 million to customers.

Highlights of Bank Australia’s 2015-16 financial performance

  • Full year net profit after tax of $22.6 million is a strong result given the pressure on net interest margin and the ongoing investment in the bank’s brand, service delivery and technology.
  • Net interest margin declined due to competitive pressures across the market.
  • Customer owned reserves grew to $435.9 million strengthening our overall capital position.
  • Capital adequacy at 18.66% remains very strong.
  • Loan funding of $1,084 million (21% annual growth) was 46% greater than 2015. Importantly, a large proportion of growth continues to come via online and broker channels delivering customer convenience and extending the geographic presence of the bank.
  • Responsible credit assessment criteria were maintained while achieving growth.
  • Deposits grew by 12% reflecting confidence in the bank’s responsible approach to banking and price competitiveness.
  • The bank’s investment grade credit rating with Standard & Poor’s remains BBB+/Stable/A-2.

Summary of Bank Australia’s 2015-16 financial performance:

 

 

Jun-15

Jun-16

Change

% Change*

Net Profit After Tax

$m

23.96

22.59

(1.37)

(5.72%)

Net Interest Revenue

$m

75.61

80.48

4.87

6.44%

Net Interest Margin

%

2.22%

2.11%

(0.11%)

(4.95%)

Cost to Income

%

64.30%

66.95%

2.65%

4.12%

Return on Assets

%

0.70%

0.59%

(0.11%)

(15.71%)

Assets

$b

3.58

4.04

0.46

12.85%

Customer Deposits

$b

3.03

3.40

0.37

12.46%

Gross Loans

$b

2.66

3.22

0.56

20.98%

Loans Funded

$m

742.87

1,084.08

341.21

45.93%

Reserves

$m

412.00

435.95

23.95

5.81%

Capital Adequacy

%

19.74%

18.66%

(1.08%)

(5.47%)

* The % change calculation is based on the actual full figure

Tags: 
Banking Financial Results

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