Small business loans growth boosts BankSA profit
GROWTH across home and business lending helped BankSA record a $229 million net profit after tax for the year ended September 30, a slight improvement on the previous 12-month performance.
GROWTH across home and business lending helped BankSA record a $229 million net profit after tax for the year ended September 30, a slight improvement on the previous 12-month performance.
The Westpac Bank-owned entity saw “solid growth” in both home lending, up 7 per cent and business lending, which rose 5 per cent.
Within business lending, loans to smaller businesses increased 10 per cent.
“It’s broadly a similar result (to last year’s $200 million profit) in a profit sense. But on our own personal metrics of growing our customer base across the two core segments, it was a very strong result,” Bank SA chief executive Nick Reade said.
“Over the past year, BankSA has generated customer growth at twice the rate of population growth in this state,” Mr Reade said.
“That is significant and we are really pleased with the double digit growth in lending to small business,” he said.
These outcomes reflected the bank’s focus and determination to support more South Australians into their own homes, and encourage more businesses to start and invest here, he said.
Improved banking experiences for customers through a $9.4 million investment in its branch network and continuing support for charities had helped the bank improve its relationship and connections to the local community.
He said there were some challenges ahead as the banking industry comes to grips with issues raised at the financial services royal commission earlier this year. “But we are in a strong position locally to adapt faster,” he said.
Overall profit for BankSA and its parent organisation Westpac was impacted by increased funding and regulatory compliance costs. Westpac posted a flat full-year profit after tax of $8 billion after customer compensation and legal costs contributed to a weak second half at its consumer and wealth divisions.
Cash earnings – Westpac’s preferred measure of profitability – for the 12 months to September 30 barely moved from the $8.06 billion reported a year ago.
Australia’s second largest lender, like the other three major banks, is dealing with issues raised at the financial services royal commission earlier this year. The total $281 million for customer remediation and associated costs was low compared to the $421 million and $360 million at rivals ANZ and NAB.
Westpac chief executive Brian Hartzer seemed to confirm analysts’ belief that costs from the royal commission may continue to bite.
“We’re committed to running our business in a way that meets standards from customers and the community and we’ll continue to look to improve things,” Mr Hartzer said.
“I’d like to say we’re largely through it but it is possible there may be other issues.”