Bright lights mask Heritage losses

A busy back office is no sure sign of success, if the latest profit for Heritage Bank is any guide.

Heritage said it approved loans worth A$1.8 billion in 2014/15, up nearly 28 per cent on the $1.4 billion approved the previous year.

That, however, translated into a below system rate of growth of 3.5 per cent in its portfolio.

Deposit growth was even lower at 3.3 per cent.

Catering to a fast turning loan book may bring costs.

The pre-tax profit for the year was $48 million, a four per cent decrease on the previous year. The net profit was $34 million, down six per cent.

Investment in digital knowhow is another drag on profit.

"Growth is a key driver in our corporate strategy and the 27.6 per cent increase in loan volumes this year is a direct outcome of that goal," board chair Kerry Betros said in a statement.

"We will continue to look for growth in subsequent years."

Betros said the bank was "in the middle of a five-year digital transformation program."

Heritage's capital adequacy ratio at 30 June 2015 was 13.4 per cent and its liquidity ratio was 19.4 per cent, well above regulatory requirements