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Andrew Todd
BNK Banking Corporation ramped up first-half profitability, pushing firmly into positive territory as fatter margins and climbing revenue showed its shift into higher-return assets is paying dividends.
The agile challenger bank reported an underlying net profit after tax of $1.8 million, marking a $3 million improvement, or a 252 per cent rise, from the prior corresponding period’s loss.
The company has continued to kick goals into higher-margin segments, with growth in senior secured warehouse funding and new partnerships putting it firmly on track to achieve its more than 2 per cent net interest margin goal.
Statutory profit after tax also turned strongly to $0.3 million, a 118 per cent swing from this time last year, underscoring the bank’s ongoing balance sheet refinement.
Leadership made the key choice to redirect capital towards higher-margin areas in 2025, including commercial lending and senior secured investments, building on earlier efforts to ease pressure from slim returns in the prime residential space.
The pivot showed clear benefits to the bottom line, with net interest income advancing 29 per cent to $11.1 million.
Operating revenue overall surged 58 per cent to $12.8 million, bolstered by fees and commissions that climbed amid diversified earnings streams.
‘In the first half of the financial year we continued to rebalance the portfolio toward higher-return, capital-efficient assets.’
BNK Banking Corp chief executive officer Allan Savins
The company says its higher-return portfolio has grown as planned, with commercial loans increasing 24 per cent to $95 million since the middle of 2024, while the overall directly funded loan book now stands at $1.2 billion, down 14 per cent from mid-year as the bank dialled back on lower-yield prime mortgages.
Lending settlements totalled $261 million for the half, a 29 per cent year-on-year decline, in line with the deliberate emphasis on selective, more profitable originations.
On the expenses front, operating costs rose 19 per cent to $12.2 million, driven mostly by a $0.8 million investment in replacing the core banking system to enhance scalability and meet regulatory standards.
BNK Banking Corporation chief executive officer Allan Savins said: “In the first half of the financial year we continued to rebalance the portfolio toward higher-return, capital-efficient assets, supporting an improvement in asset mix and further strengthening NIM. We also advanced key strategic initiatives, including the commencement of senior secured investments and measured growth in commercial lending, further diversifying our earnings base. These outcomes were achieved alongside disciplined cost management and prudent balance sheet settings.”
BNK’s funding mix is anchored by a suite of funding warehouses, including a $500 million facility with Goldman Sachs, $300 million from Bendigo & Adelaide Bank and a $300 million self-securitisation facility. These sit alongside customer deposits sourced through the Goldfields Money and BNK brands, as well as broker channels, providing solid liquidity support.
Deposits closed at $1.1 billion, contributing to a sturdy balance sheet, with cash and equivalents reaching $129 million, up from $118 million last half.
Total assets sit at a manageable $1.6 billion, with net assets steady at $121 million and net tangible assets per share at $0.99.
A standout measure in BNK’s arsenal was its capital adequacy ratio – the buffer of its own funds against risk-weighted assets – which strengthened to 27 per cent, up from 20 per cent a year ago. This is well above the regulatory floor of around 10 per cent and should provide ample capacity for future initiatives.
Investing and financing activities saw minor outflows, netting an $11 million cash increase for the period. Notably, BNK says it agreed to sell $221 million of residential home loans to Bendigo Bank via the Bullion Trust in February, post-reporting. The company says it expects to book a $2 million net profit in the second half while retaining servicing fees on the assets.
The bank’s principal activities remain focused on retail banking and wholesale mortgage management under the BNK, Goldfields Money and Better Choice banners.
BNK’s half-year performance shows a challenger bank hitting its stride, with lifting margins and emerging revenue diversity driving momentum.
By reallocating to higher-yielding assets, investing in core systems and maintaining credit discipline, the company is shaping up as a standout example of innovative banking in a tough lending landscape.
With a robust capital position, growing commercial exposures and a drive to innovate, BNK appears well positioned to extend its progress towards that all-important two per cent net interest margin goal.
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