Heritage Bank passes $10b milestone

HERITAGE Bank's after-tax profit year-on-year has dropped 3.9% to $43.28 million, but chairman Kerry Betros isn't too worried.

Heritage Bank chairman Kerry Betros. Picture: Nev Madsen

HERITAGE Bank's after-tax profit year-on-year has dropped 3.9% to $43.28 million, but chairman Kerry Betros isn't too worried.

Record-low interest rates, the investment of tens of millions of dollars upgrading digital services, and increased regulations off the back of the banking royal commission have all contributed to what Mr Betros described as a "tough" environment for financial institutions.

"But we're more than happy with the results. They're an excellent set of results in this environment," he said.

Talking up Heritage Bank's results for the 2018/19 financial year, Mr Betros said the bank had passed the milestone of $10 billion in total consolidated assets, reaching a final figure of $10.088 billion.

Despite the slight drop in after tax profit, Mr Betros said loan approvals were up 8.3% to $1.88 billion and total customer numbers grew by 1.8% to 308,000.

Retail deposits grew by $364 million to reach $6.938 billion at June 30, 2019, a 5.5% increase.

But interest rates remained a key concern for the bank, Mr Betros said.

"The pressure is the low interest rates," he said.

"It's a delicate balancing act to give our borrowers the cheapest rate we can. As opposed to that, we have more people with deposits with us who need the income from their deposits.

"It's a very difficult environment with a lot of competition out there."

Mr Betros said the Federal Government's one-size-fits-all approach to regulation off the back of the Royal Commission was also having an impact on Heritage's bottom line.

"So all these regulations that the big banks are having to comply with, the smaller organisations are having to do the same thing. And it's a very big cost impost on us," he said.

And with Reserve Bank governor Philip Lowe flagging another potential interest rate cut next week, Mr Betros said that would only make life "more difficult" for financial institutions.

"Ideally, we'd like to see interest rates stay where they are," he said.

"We'll have to wait and see if they do (make the cut)."

Originally published as Heritage Bank passes $10b milestone