Release Date: February 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Retail deposits increased by $180 million compared to the prior corresponding period.
- Loan arrears remain low at 0.14% of the loan book, demonstrating strong credit quality.
- The bank declared a fully franked interim dividend of $0.11 per share.
- Capital remains strong at 15.34%, with CET1 at 12.82%.
- Auswide Bank Ltd (ASX:ABA, Financial) is committed to pursuing growth in retail deposits and reducing reliance on higher-cost funding channels.
Negative Points
- Statutory net profit after tax for the half year was $7.663 million, down 45.7% from the prior corresponding period.
- Net interest margin (NIM) contracted to 150 basis points from 177 basis points in the previous half year.
- Loan book experienced a marginal reduction of 2.1% in the first half of the financial year.
- Net interest revenue reduced by 19.8% to $37.3 million.
- Cost-to-income ratio increased to 74.5% due to reduced net interest revenue.
Q & A Highlights
Auswide Bank Ltd (ASX:ABA) H1 FY '24 Earnings Call Highlights
Q: Given the challenges faced by smaller banks, do you see this as a catalyst for M&A in the market?
A: (Gregory Kenny, Interim CEO) We are always looking for M&A opportunities. It requires the right conditions, but it is a priority for the Board to explore mergers or acquisitions to enhance diversity and funding sources.
Q: With the potential peak in the rate cycle, what is the outlook for NIM restoration?
A: (Gregory Kenny, Interim CEO) We expect a gradual improvement in NIM over the next 6 to 12 months due to easing competition in the home loan market and more rational pricing in the deposit market. (William Schafer, CFO) The replacement of low-cost RBA term funding and the maturation of fixed-rate loans will also contribute to this gradual improvement.
Q: When is Doug Snell expected to start as CEO?
A: (Gregory Kenny, Interim CEO) Doug Snell is expected to start mid to late April, with a transition period of one to two weeks.
Q: Have there been significant movements in loan rates and customer deposit rates in the second half to date?
A: (William Schafer, CFO) We have seen some increases in front book loan rates and a slight easing in term deposit rates. The advanced payments have stabilized, and we expect a gradual improvement in NIM throughout the calendar year.
Q: Are there any risks associated with achieving the 5.8% loan book growth target for the second half?
A: (Gregory Kenny, Interim CEO) No, we do not see any risks. (William Schafer, CFO) Our pricing is competitive, and we continue to focus on low LVR lending, maintaining stringent risk management practices.
Q: How is the Queensland economy performing, and what are the associated risks for Auswide?
A: (Gregory Kenny, Interim CEO) The Queensland economy is robust with strong population growth and no deterioration in loan quality. (William Schafer, CFO) Demand for property remains strong, and the economy benefits from low unemployment and significant investment.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
