Losses from its reverse-mortgage unit pulled mid-sized lender Bendigo and Adelaide Bank’s earnings down, according to a report from Reuters.
The bank’s annual cash earnings fell 6.6%, with the decline driven largely by higher remediation costs and losses for its reverse-mortgage unit, Homesafe, according to the report.
The property market has weakened amid stricter lending rules, higher taxes on foreign buyers, and an apartment glut, causing a drag on consumer spending. The drag puts pressure on Homesafe, which allows buyers to draw down the equity in their homes for cash, Reuters reported.
The bank incurred remediation costs of $16.7m for the year, including legal bills related to the misconduct revealed by a public inquiry into the financial sector’s wrongdoing in 2018. For the 12 months ending in June, the banks’ cash earnings—excluding one-off gains or losses—fell to $415.7m, according to the report.
The bank’s statutory net profit was at $376.8m—down from the previous year, according to a report from The Advocate.
However, the mid-sized lender experienced growth in the number of new customers.
“Our focus on and investment in future growth has produced a 145% increase during (the) financial year 2019 in the number of new millennials choosing to bank with us,” said Marnie Baker, the bank’s managing director and chief executive.
Bendigo and Adelaide Bank continues to digitise its offerings, focusing on its priority markets. Establishing and fostering lasting relationships with the younger demographic will deliver significant long-term growth opportunities for the bank, according to Baker.