Suncorp Bank APS 330 – September 30, 2021

PREVIEW

Suncorp Bank’s home loan portfolio continued to grow during the September quarter, increasing $ 446 million or 1.0% (3.9% annualized). The momentum in mortgage loans continued, with total housing units 40% higher than in 1Q21 and up 18% compared to the June quarter. The increase in home loan deposits is due to the Bank’s constant competitive offers, improved turnaround times, and improved credit scoring efficiency. The growth in real estate loans was supported by a positive net refinancing rate, the continued implementation of its targeted work program aimed at improving the client and broker experience and the simplification of its origination process. The Bank maintains a portfolio of high quality and prudently positioned home loans, remaining weighted for owner-occupiers, principal and interest repayments and loans with a loan-to-appraisal ratio (LVR) of less than 80%.

Business loans contracted $ 60 million or 0.5% (2.1% annualized) due to a reduction in the commercial loan portfolio partially offset by growth in agri-food lending. The contraction in trade credit is due to the completion of investment projects and large property sales initiated by clients, taking advantage of the appreciation in property values. The modest growth of the agribusiness was driven by restocking, property purchases, and summer crop plantings, partially offset by repayments from sales of commodities, including proceeds from the initial harvest of farmers. winter crops.

Growth in household deposits was broadly in line with strong system growth recorded in the quarter, aided by a reduction in household spending due to lockdowns in New South Wales and Victoria. Growth in the Bank’s demand deposits was primarily driven by growth in transaction and mortgage account balances, supported by client-focused initiatives including zero account maintenance fees, competitive rates, campaigns and the continued development of digital banking functionality.

The Bank continued to focus on increasing its digital empowerment and capabilities. The number of digitally active Bank customers increased by 4% (annualized) during the quarter. The average number of monthly Suncorp app connections per user continued to increase, rising to 22.9 in September 2021 (September 2020: 18.6). This growing digital engagement remains a key goal, including the migration of customers from mobile banking apps to Suncorp’s flagship app. As of September 30, 2021, 32% of retail customers were using the Suncorp app, up from 23% as of June 30, 2021.

Total depreciation charges for the quarter represented a net release of $ 1 million. This reflects an unchanged collective allowance and a small specific allowance reversal for a group of commercial loans due to improved performance. The collective provision will be reviewed again as part of the finalization of the half-year financial situation at December 31.

Gross impaired assets decreased $ 11 million in the quarter to $ 169 million or 29 basis points of gross loans and advances (GLA). This is mainly due to a reduction of $ 7 million in gross impaired mortgage loans, supported by the strength of the housing market supporting asset sales by borrowers, coupled with high liquidation rates for properties auctioned. .

Total non-impaired loans in arrears decreased by $ 99 million in the quarter to $ 451 million or 78 basis points of GLA, mainly due to a decrease of $ 91 million in mortgage arrears. The improvement in the arrears situation is attributable to the cohort of clients leaving hardship arrangements and returning to performing status, following previous COVID-19 temporary loan deferral assistance. The strength of the housing market also led to an increase in sales of willing borrowers.

As of September 30, 2021, 92.2% of Home Lending and SME accounts receivable (~ 16,800) having benefited from a temporary credit deferral between March 2020 and March 2021 are performing or have been withdrawn from the portfolio, compared to 91.4% at June 30, 2021 The remainder continued to receive help through hardship arrangements (5.3%) or were 90 days past due or impaired (2.5%).

On July 19, 2021, APRA announced the second iteration of the temporary deferral agreements, to provide assistance to customers affected by COVID-19 lockdowns. As of September 30, 2021, 378 home loan accounts (~ $ 139 million) and 32 SME loan accounts (~ $ 19 million) were subject to a COVID-19 temporary deferral agreement, representing respectively 0.2% and 0.1% of total mortgage loans and SME accounts. This is significantly less than the roughly 16,800 total accounts that required assistance in the first iteration in 2020.


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