Auswide discusses a new name and a path to growth

Interviews

by Carolyn Herbert

Transcription of Finance News Network with Auswide Bank Limited (ASX:ABA) Managing Director, Martin Barrett
 
 
John Treadgold: Auswide Bank Limited (ASX:ABA) has recently rebranded and has renewed its focus on managing deposits and mortgages. I’m John Treadgold and joining me today at the ASX Investor Series is the Company’s Managing Director, Martin Barrett. Martin welcome to FNN.
 
Martin Barrett: Thank you very much John, it’s a pleasure to be here.
 
John Treadgold: Auswide Bank has gone through a major transformation this year with a name change. What was behind the shift and where does Auswide operate?
 
Martin Barrett: Auswide used to be Wide Bay Australia. Wide Bay Australia used to be Australia’s only listed Building Society. We made the decision some two years ago, when I came into the organisation that it would be a good step for the organisation to take, to move from Building Society to a bank, because banks are better recognised in the Australian financial landscape. And they’re considered to be safer perhaps than Building Societies.
 
So we made that bold decision to actually make that conversion with the assistance of APRA (Australian Prudential Regulation Authority) the regulator, got that banking licence. Following that of course, we’ve been doing some work in relation to changing the brand. And the reason we thought that changing the brand would be appropriate for us, is we are actually a national business. And the brand that we have was very regional named. So conversion to Auswide was a step for us, which we felt was very appropriate and would be a positive step for us, as we continue to grow our business nationally.
 
John Treadgold: What is your footprint in terms of branches and the size of your loan book?
 
Martin Barrett: So we have some 32 branches that stretch across Queensland. But of course, the branch network is only one part of our distribution. Our distribution also extends to the work that we do with brokers, the major aggregators in Australia, which gives us home loan flows from around Australia, as well as our digital presence. And of course in this day and age, digital technology continues to be a major focus for us. And it extends obviously,that distribution platform in the virtual world. If you like, the website is your new front door.
 
John Treadgold: Looking at financials, what were the highlights of the first half?
 
Martin Barrett: We’ve been on a journey over the last two years as we’ve been modernising the organisation. As some of the legacies used of the past, that worked for us in the past, we’ve been unravelling those and ensuring that we’re on a strong platform for growth, for the future. But when I look to some of the success factors over the course of the last six months, the last year, we’ve got growth occurring back into the chief entity. Our loan book has grown by nearly five per cent, which is positive.
 
We’ve seen our dividend increase; we’ve seen our net interest margin improve by seven basis points. Our loan quality has improved our arrears have been coming down, which is great. And we’ve taken some very, very positive steps we believe, in terms of building a platform for the organisation that, as I said before, extends well for growth.
 
John Treadgold: We know the mortgage market has been growing rapidly on the back of investor demand for property. What percentage of your loan book is made up of mortgages and how much has this changed, over the last 18 months?
 
Martin Barrett: The mortgage market is a very ferocious market at the moment, a significant amount of competition. But we have been competing well and competing strongly. And our approval levels, which is an indication of our growth continued to improve, despite the fact that the Queensland market is not quite as strong as say New South Wales or Victoria, but still that’s growing well. Our loan book, our home loan book, represents around about 98 per cent of all our lending to date, which is obviously off the back of the traditional Building Society model. But the future of the organisation looks a little different as we look to diversify.
 
We’ve introduced personal loans and we introduced those some 12 months ago. We expect that we will be putting forward some very strong products and growing strongly in the PL (personal loan) space, over the course of the time ahead as well as business banking. We established the business-banking platform a year and a half ago and we’re looking to make some inroads, providing services and products to that particular market as well. Loan book in total, is around about $2.4 billion.
 
John Treadgold: Auswide Bank has grown from being a local lender to having a national presence. How do you balance the small bank appeal with the need to grow on scale?
 
Martin Barrett: Really good question, because one of our advantages we believe, is the way that we actually connect to our customers. Our ability to provide a service level that we believe is much stronger, much better, treating people as people rather than numbers, in our particular business. We don’t have offshore call centres, we keep everything local in terms of our business and we pride ourselves in that service delivery.
 
So keeping that service delivery really sacrosanct, putting the customer at the heart of everything we do, if you like, remains absolutely key to us. But then growing, extending our head and extending our tail as we call it, growing further into North Queensland. And extending our business and growing further into New South Wales and the rest of Australia, are absolute ambitions for us.
 
John Treadgold: Looking further, what’s on the horizon for Auswide Bank that investors should keep an eye on?
 
Martin Barrett: We’ve got a lot of things. We’ve just completed our whole operating system upgrade, which is substantial for us, gives us significant capability in terms of understanding our customers better. We have a whole new lending system that goes live in the next month, which will improve the efficiency of our lending platform enormously. We have online home loans, online personal loans, online transaction account and term deposit opening. Again within the next two months, that capability will be up there, so we’ll be truly digital in terms of that particular space.
 
We have an old legacy business called Mortgage Risk Management, an old LMI business. We are close to closing that down. That will actually mean that a substantial amount of capital will come back onto our balance sheet. We have a substantial capital position now, very strong. We’ll be even stronger, we believe, in the course of the next couple of months as that capital comes back. And of course, we have momentum happening in terms of our lending right now. Our lending flows are up and we’re building a head of steam. So we’re pretty confident that the story for investors going forward, will be a positive one.
 
John Treadgold: A lot to look forward to. Martin, thank you for joining us on FNN.
 
Martin Barrett: Thank you very much John.
 
 
Ends

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