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Suncorp bank boss John Nesbitt says lending under careful control

Suncorp’s new banking chief executive John Nesbitt Source: News Corp Australia Suncorp’s new banking chief executive John Nesbitt Source: News Corp Australia
SUNCORP’S banking arm has defended its rapid growth in investor home loans, an area in which the Reserve Bank of Australia has voiced concern.

“We’ve been quite selective in the risk that we’re taking,” Suncorp’s new banking chief executive John Nesbitt said.

Australian Prudential Regulation Authority figures show Suncorp’s home loans to investors have grown almost 11.7 per cent in the 12 months to March, from $9.75 billion to $10.89 billion.

Its loan growth to home buyers was muted at 1.4 per cent, from $24 billion to $24.34 billion.

Mr Nesbitt, 56 and Suncorp’s former chief financial officer, said the first-homebuyers market had cooled after a rapid increase but the investor market had taken off, particularly in NSW and Victoria.

He said Suncorp had been improving the quality of lending to lower loan-to-valuation levels and was working on getting a better risk process. Still, it follows a recent warning from the RBA.

“Stronger activity in the housing market, particularly by investors, can be a signal of speculative demand,” the central bank said.

“Strong investor lending may contribute to a build-up in risk in banks’ mortgage portfolios by funding additional speculative demand that increases the chance of a sharp housing market downturn in the future.”

Mr Nesbitt said Suncorp knew the limits it was prepared to play to and was deliberate in how it went about it. The bank, which has recovered from years of heavy bad debt charges, is effectively “new”.

He said programs were underway, including replacing all core technology and upgrading risk management capability.

Long term, Suncorp is looking to increase its Queensland home lending share from 9 per cent to the low-mid teens.In 2010, Suncorp set targets and says it has largely achieved those, such as growing at 1 to 1.3 times industry rates. But it came in “just under” on targets such as trebling customers and doubling branches in NSW and WA.

One analyst concern is of a loss of loan quality. “We’ll be very careful with that and I’m not going to do that,” Mr Nesbitt said.

The lender’s profits are rebounding after, when combined with its then “bad bank” division, the bank posted a rare loss in 2013. Profits for the last half year were $105 million.

Suncorp is looking to grow its Queensland home lending share from 9 per cent to the low-mid teens in the long-term. One analyst concern is of a loss of loan quality. “We’ll be very careful with that and I’m not going to do that,” Mr Nesbitt said.

The lender’s profits are rebounding after, when combined with its then “bad bank” division, the bank posted a rare loss in 2013. Profits for the last half year were $105 million.

In 2010, Suncorp set targets and says it has largely achieved those, such as growing at 1 to 1.3 times industry rates. But it came in “just under” on targets such as trebling customers and doubling branches in NSW and WA.

Author : Liam Walsh
Source : The Courier-Mail

 

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