Auswide Bank’s Loan Book Growth Accelerated by 6% in 2H FY19

Auswide Bank Ltd (ASX: ABA) forms a part of the financial sector, and it provides an extensive range of personal and business banking products and services to the Aussies directly or in partnership with leading service providers through an omni-channel distribution strategy which comprises of branches, strategic relationships and online & digital channels.

On 4 June 2019, Auswide Bank Ltd provided its business update ahead of its financial year 2019’s end on 30 June 2019.

In the second half of FY2019 period, the company reported that the loan book growth has accelerated with annualized growth expected to be of 6%. This reflects the strategy of the company of diversifying its lending across geographies and customer segments.

The quality of the loan book continues in the downward trend in arrears and the concentration of less than 80% loan to valuation ratio lending. After the strong management of funding and lending margins along with improved BBSW environment, the net interest margin improved in the 2H FY2019. The company’s capital continues to be very strong. Thus, it would help the company in providing further opportunity for growth.

As per the current trading results, the company expects that there will be a slight growth in the final dividend in 2H FY2019 as compared to 2H FY2018.

Mr Martin Barrett, the Managing Director of Auswide, highlighted that after the Queensland Maroons partnership, the company’s brand awareness has been improving. The Queensland Maroons partnership received positive feedback from the customers of the company, brokers as well as local communities.

In the first half of FY2019, the statutory net profit after tax was up by 5% to $8.467million as compared to its previous corresponding period. The total operating income increased by 2.1% to $36.098 million, and EPS increased by 0.7 cps to 20.1 cps. Despite strong competition, there was an Annualized Loan Book growth of 4.9% to $2.982 billion. As a result of strong competition in the home loan market and increased wholesale funding costs, there was a slight decrease in the net interest margin to 1.88%.

In the 1H FY2019, the bank had retained a very strong capital position with a consolidated capital ratio of 14.43% by the period end, with Tier 1 capital accounting for 12.30%. The company in 1H 2019 stated that the strong capital position of the company would drive the loan book growth in the second half of the financial year. Further, it will provide the bank with more opportunities to benefit from M&A along with fintech partnerships. ABA had declared a fully franked interim dividend of 16 cps for 1H FY2019.

On the outlook front, the company in the 1H FY2019 period had stated that the focus of the bank in FY2019 would be firstly, to continue investing in its product and services to ensure that they meet the customers’ need. It also includes the strengthening of the omni-channel self-service channels, which would widen the customer’s access to products and services. It would result in simplifying its products and further automating back-office processes for improved customer experience and at the same time driving down the cost to income ratio.

The second was continued investment in the Auswide Bank brand to enhance and broaden its communication with a wider customer base.

The third was to decrease the reliance of bank on higher cost securitization funding and to develop efficient fund mix.

In the last 5 days, the shares of Auswide Bank Ltd have generated a return of 3.09%. The shares of ABA were trading at A$5.050 (as on 5 June 2019, AEST 1:39 PM) up by 1%. ABA holds a market capitalization of A$210.91 million and approximately 42.18 million outstanding shares.


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