BNK Banking Corporation Limited (ASX: BBC) is an ASX listed financial institution which provides various services like term deposits, various types of loans and insurance and the modern technology-driven services like internet banking, mobile banking etc. for its clients.
On 20th May 2019, the company announced its business update for the quarter ended 31 March 2019. In the last nine months ended 31st March 2019, BBC recorded $41 million in settlements, with wholesale lending business recording a growth of 30% and aggregation business recording a growth of 7%.
The company has recorded the settlements in on balance sheet, wherein wholesale loans stood at $123.2 million, up by 30% versus pcp. The banking loan settlement was recorded at $18.7 million, an increase of 18.7% as compared to pcp. The total wholesale loan settlements and banking loan settlements for 1HFY19 stood at $337.6 million and $22.4 million respectively.
On the Balance sheet front, the company has maintained its momentum in the banking loan growth and for this quarter was posted at $190 million which is a record for the company, up by 13% versus pcp. Since FY 2017, the company has been consecutively posting growth in the banking loan book on a six-month basis.
The wholesale loan book has also reflected an increase, with good numbers in less than three years period. In Q3FY19, the company posted approximately $2.3 billion of the wholesale loan book, which is an increase of 6% versus pcp. Previously, in the reporting period of 1HFY19, the company had posted approximately $2.3 billion of the wholesale loan book. When compared to the 1HFY17’s number of $1.5 billion, it’s an increase of more than 50% in less than three years.
The net interest margin (NIM) was reported at 1.9% for the quarter, primarily due to the transactional account deposit mix of ~20% of the total deposit book. Over the long-term period, the company continues to target NIM above 2.00%.
The balance sheet of the company has remained strong and continues to be stable, having stable arrears with no additional loss provisions required during the quarter. The company also maintained the capital adequacy ratio at a healthy 17.6%, which would provide further the space for BBC’s growth.
Mortgage Aggregation Division
Finsure is an aggregation division of the company and is estimated to account for approximately 1 in every 10 broker loans written in Australia, making it one of the largest distribution networks in Australia.
It had been successful in beating the competition by achieving record growth of 1,630 loan writers, which is an increase of 17% versus pcp. The total loan settlements stood at $9 billion for the quarter, up by 7% versus pcp. The highest settlements since FY14 were achieved in FY18 period standing at $12 billion.
The aggregation loan book stood at $36 billion for the quarter, up by 21% as compared to the pcp.
The company is well positioned to capture market share, and for the next quarter (4Q19) its key focus areas are conversion and settlement of its strong mortgage application pipeline and to improve its capital efficiency to diversify its funding sources.
Key personnel’s statement
Simon Lyons, Managing Director of the company, stated that the business had performed well despite the backdrop of a much softer housing market. The loan book, balance sheet and loan writers, have been growing well, depicting a strong value proposition.
The market capitalisation of the company is A$52.75 million. The stock has 52-week high and low of A$1.45 and A$0.6, respectively. The stock of the company was trading at the day’s low of $0.62, (as on 20th May 2019, AEST: 02:37 PM). The last one-year return of the stock is negative 54.2%, and the YTD return stands at negative 10.4%.