Clean and clear at Bank Australia

George Lekakis Authorised deposit-taking institutions

The rapid growth in deposits and lending that has marked Bank Australia’s financial performance in recent years shows few signs of abating.

The bank last night unveiled its first half results, which showed a 10.8 per cent surge in customer deposits in the 12 months to the end of December.

Deposits held by the bank stood at A$4.6 billion at the end of December 2017 but increased more than $500 million to around $5.1 billion a year later.

The growth means that Bank Australia is currently one of the fastest growing deposit takers in the country and appears to be benefitting from a net outflow of cash from banks such ANZ and Bank of Queensland.

The deposit bases of these banks fell by $7.5 billion and $300 million respectively in the 2018 calendar year.

A big driver of the mutual bank’s customer acquisition program has been its sharp pricing in the term deposits market where it has consistently ranked in the top quartile of institutions listed in the Mozo and Canstar product tables for tenures of one to three years.

However, managing director Damien Walsh attributes part of the double-digit growth to the bank’s effort to position itself as a progressive, values-driven brand in the banking market.

The most recent brand-building campaign pitches Bank Australia as the bank of “Clean Money”.

“We’re attracting the next generation of customers to the bank who are aligned to our strong value proposition of being a progressive, values based bank that always places the customer at the centre of our business,” Walsh said.

“With our ‘Clean Money’ messaging we’ve started a conversation across Australia about the impact money and your choice of bank has on the world we live in.

“Our financial performance across the past six months has been strong and we are pleased to be growing above system rates of growth in a low interest environment, while still offering very competitive pricing to our customers.”

Walsh said the bank was now considering its funding options following the passage of federal reforms that remove longstanding restrictions on mutuals to raise capital and funding.

“We have not undertaken a securitisation of our loans, but that is something we’ll be working towards in the future,” he said.

The move into wholesale funding could further accelerate growth of the bank’s net interest revenue, which has been growing at close to 6 per cent.

While Walsh said he was “comfortable” with the company’s current growth trajectory, he acknowledged that net profit after tax declined 8.5 per cent in the December half to $12.2 million.

He attributed the profit fall to heavy one- off investments in digital banking channels.