Suncorp Bank today provided its quarterly update on Bank assets, credit quality and capital as at 31 March 2017, as required under Australian Prudential Standard 330.
The home lending portfolio grew modestly over the quarter, reflecting challenging market conditions.
Suncorp Banking and Wealth CEO David Carter said the Bank continued to focus on targeted segments of the market, prioritising risk selection and quality, and was well positioned in its standing relative to regulatory changes.
“We responded early to signals by the regulators to improve our position in relation to changes to macro-prudential settings, particularly APRA’s interest-only and investor lending,” Mr Carter said.
“We have been deliberate in shaping the portfolio through our focus on risk selection and expect modest growth in home and business lending as our competitors align to more conservative positions.”
Business lending growth was flat, with strong new business volumes offset by repayments from successfully completed property developments and favourable conditions for agribusiness customers leading to repayment of loans.
Credit quality across Suncorp Bank’s business loan portfolio remains sound, with very little exposure to the higher risk lending segments of inner-city apartments and businesses affected by the resources industry slowdown.
The benefits of prudent risk management are reflected in the continued strong credit quality performance over the quarter, with impairment losses of $7 million, or 5 basis points of gross loans and advances (annualised).
The Bank’s funding strength was demonstrated during the quarter through the successful pricing of a $1.25 billion Residential Mortgage-Backed Security (RMBS) and an increase in the Net Stable Funding Ratio (NSFR) position, closing at 109%.
Following the payment of the interim FY17 dividend to Suncorp Group Limited, the Bank’s Common Equity Tier 1 (CET 1) ratio continues to be strong at 9.19% and remains above the target range of 8.5% to 9.0%.
Suncorp is also in the process of determining the impacts on the business, following several announcements in the Federal Budget impacting the financial services sector.“Australia has a strong banking system and Suncorp supports the principles of the Financial Services Inquiry to achieve competitive neutrality,” Mr Carter said.
“The Treasurer announced two measures that have the potential to support competitive neutrality – the Bank levy and the harmonisation of supervision of the ADI and non-ADI sector.
“These measures have the potential to further improve the effectiveness of the macro prudential settings that have recently been introduced and will go some way to realising a more level playing field.”
