Auswide Bank (ASX:ABA) talks growth in lending

Interviews

by Kathy Skantzos

Auswide Bank Limited (ASX:ABA) Managing Director, Martin Barrett, talks growth outside the company's Queensland base, peer-to-peer (P2P) lending and credit quality at this stage of the cycle.


Kathy Skantzos: Hello Kathy Skantzos from the Finance News Network. Joining me from Auswide Bank Limited (ASX:ABA) is Managing Director, Martin Barrett. Martin welcome to Finance News Network.

Martin Barrett: Thank you Kathy.

Kathy Skantzos: First up, can you start with an introduction to the company?

Martin Barrett: It’s a company that’s over 50 years of age. It started life as a small building society in Burnett, in Queensland and over time has moved to a national company. A bank, converted to a bank back in 2015. Market cap about $230 million and specialising really in home loans, in business banking and in consumer loans. As well as of course, deposits for our customers.

Kathy Skantzos: Now to your FY17 results. What were the highlights?

Martin Barrett: We had a good year. So 2017 was a culmination of a number of strategies coming together. So we saw underlying net profit after tax, increase by about 11.4 per cent. Net profit after tax and the standardised format was 29 per cent. We had a merger during 2016, so there were some one-off costs in that. Progress was good though, we had some good home loan growth, good consumer loan growth. And we also saw our interest revenue up by about 6.7 per cent. Cost to income ratio also importantly, was down by about 3.5 per cent. So the culmination of all those things, led to a good return and a better dividend for our shareholders.

Kathy Skantzos: Now to your loan book, can you give us an update?

Martin Barrett: Our loan book now is broken up into sort of three categories. Originally we were an organisation focused only on home loans. But more recently, we’ve been developing our capability and consumer lending, as well as in business banking. Our loan book size today is about $2.8 billion and we’ve been growing those aspects of that loan book, quite well. And we do have some expectations to continue to accelerate that growth, over the years ahead.

Kathy Skantzos: Can you provide a comment on APRA’s capital requirement and your Moody’s rating?

Martin Barrett: We’re in a fortunate position and our capital level is the strongest of any of the listed ADIs, listed banks in Australia. So it puts us in a very good position in terms of any future capital changes that APRA may require. In terms of the Moody’s rating, that’s a very positive step for us, because it actually provides us with a cheaper level of funding in relation to some of those wholesale funds, that we do rely upon to assist us with our loan growth. So the Moody’s rating is a good outcome for the organisation.

Kathy Skantzos: Now to your strategy, can you tell us about your digital innovations?

Martin Barrett: A big play for Auswide Bank. Our last number of years havereally been about modernising the organisation and creating a lot more capability, for our customers online. So we have a very capable and a very user-friendly app. We’reworking on the delivery of wearables for our customers and we hope to roll that out, in the course of the next three months. We’ve got some credit card technology and capability that we’re close to rolling out. And we have a whole bunch of new initiatives around opening accounts online and so forth, for our customers over the course of the year ahead as well.

Kathy Skantzos: Last question Martin. What’s the long-term ambition for the company?

Martin Barrett: We continue to grow, we’re growing strongly organically. We took a merger with a small credit union back in 2016. If there are future merger opportunities, we would be keen to pursue those, because that assists with the growth and the geographic spread of the organisation as well. But we will continue to invest in technology and we’ll continue to grow our customer base, which we’ve been quite successful at doing at the moment.

Kathy Skantzos: Martin Barrett, thank you very much for the update.

Martin Barrett: Thank you very much Kathy.


Ends