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Andrew Todd
BNK Banking Corporation has tabled a record net interest margin (NIM) for the March quarter, with the closely watched bank health metric swelling to 2.11 per cent.
The company says the result was underpinned by a strategic shift into higher-yielding commercial lending that has seen its commercial loan book double to more than $210 million in just 12 months.
The Perth-based lender’s NIM has continued its charge north with the impressive margin growth translating into a 6 per cent jump on last quarter’s net interest income and hitting a record $6.3 million for the three months.
The performance comes on the back of solid strategy execution, as evidenced by its preferred commercial loan book.
This deliberate pivot towards higher-margin, capital-efficient assets appears to be paying dividends, helping the bank navigate a period that included two RBA cash rate increases.
‘The results represent continued improvement in the base returns on the portfolio with cautious growth in our loan book.’
BNK Banking Corp interim chief executive officer Steve Kinsella
BNK says its underlying profit after tax sits at $621,000 for the quarter, showing a considerable upward trend on the financial year-to-date, which now totals $1.06 million for the three quarters.
The bank’s total loan book stood at a solid $984 million at the end of March, supported by a stable funding base of $1.027 billion in deposits, which the company says has delivered a healthy deposit-to-loan ratio of 104 per cent.
Customers are increasingly shifting into higher-yielding term deposits, a trend driven by the rising interest rate environment, with term balances up and at-call deposits easing during the quarter.
BNK has also added another lever to its funding toolkit, launching a negotiable certificate of deposit program. The short-term deposits can be easily used as collateral with the central bank, giving it quicker and more flexible access to cash when needed.
In a sign of prudent risk management, BNK also reported a reduction in loan arrears across its portfolio. Residential home loan arrears for loans over 90 days dropped to one per cent, down from 1.37 per cent at the end of December.
Commercial loan arrears saw an even better improvement, falling to 0.97 per cent from 1.84 per cent over the quarter.
The company says its capital position remains robust, with a Capital Adequacy Ratio of 26.4 per cent – the financial buffer a bank holds through capital relative to risk – and well above the Australian regulatory requirements.
BNK Banking Corporation interim chief executive officer Steve Kinsella said: “The results for the quarter represent continued improvement in the base returns on the portfolio with cautious growth in our loan book. The recent change in the rate environment, and forward expectations, has created elevated competition in deposit rates which will create some headwinds for continued growth in our margins, though we expect margins to continue to track our internal medium-term targets.”
The quarter also saw the appointment of Mr Kinsella, formerly the chief financial officer, to the interim CEO role. With over 30 years of banking experience at institutions such as CBA, Bankwest and ABN Amro, he has been credited with playing a central role in BNK’s recent revival story.
In a lending market that can be unforgiving and favours the big end of town, the emerging BNK’s ability to expand its margins is promising.
The strategic decision to chase higher-return commercial loans rather than just slugging it out in the hyper-competitive residential mortgage space appears to be a smart one.
With a healthier loan book, lower arrears and a solid capital base, BNK seems to have built a firm platform from which to navigate the next phase of the interest rate cycle, no doubt hopeful of stringing together a set of record quarters to close out 2026.
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