Bank Profits

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Heritage Bank reported an after-tax profit growth of 9.6 percent for the financial year ended June 30 over the previous year, and improved its loan approvals by 34 percent.
Its after-tax profit was $39.62 million, up 9.6% on the $36.14 million in 2015/16. 
Loan approvals totalled $2.391 billion, up 34.3% on the $1.78 billion. The lender's loan approvals were down slightly in the previous financial year.
“We have been on a deliberate growth trajectory, as we look to build our loan book, retail deposits and assets. That growth will be critical for us in reshaping the business and investing more in our digital capabilities in coming years, both in the front-end and in the back office,” said CEO Peter Lock.
Nearly 50% of its loan approvals came via originations through the bank’s broker channel and Lock added that “we will continue to build our presence outside Queensland.” 
Pre-tax profit growth was solid, up 10.2% to $56.31 million compared to $51.11 million the previous year.  
Lock said after accounting for one-off structural items, including the gain on the sale of Heritage’s Financial Planning business, the adjusted pre-tax profit of $52.77 million was still a 3.3% increase on the previous year. 
Lock said Heritage had maintained its net interest margin at a similar level as the previous year, and had slightly reduced its cost to income ratio. 
Chairman Kerry Betros said Heritage’s mortgage loan arrears greater than 30 days  was0.32% as at June 30.
“Compare that to the latest available Standard and Poor’s Performance Index (SPIN) industry figure of 1.16%, as at May 2017.  We sit at one third of the industry average, which illustrates the continued strength of our loan book and the robustness of our credit practices,” he said. 
Heritage said its capital adequacy ratio at 30 June 2017 was 13.44% and its liquidity ratio was 15.43%, well above regulatory requirements. 
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Heritage Bank says loan approvals improve 34 percent

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<img src="https://counter.theconversation.edu.au/content/64216/count.gif" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
Bill Shorten is continuing to press for a banking royal commission by highlighting rising bank profits and escalating consumer complaints in recent years.
Shorten said the tribunal that some government MPs – including Liberal Warren Entsch and Nationals John Williams – are urging be set up to consider grievances would not solve the problem.
The backbenchers want the tribunal to be a forum to give redress without victims facing expensive legal costs; they say it should also be able to impose fines. The government, under pressure from Shorten’s campaign for a royal commission, has indicated it will consider the proposal.
But Shorten said there was already the Financial Ombudsman Service (FOS), a not-for-profit, non-government organisation for dispute resolution that provides a free service for applicants.
In 2008-09 there were 19,107 new complaints to FOS; by 2014-15 this had risen to 31,895, a 60% increase. Credit card complaints rose by 145%, from 6731 in 2008-09 to 16,458 in 2014-15.
The Commonwealth Bank’s net profit went from almost A$4.8 billion in 2006 to nearly $9.2 billion in 2015. The figures of the other banks were: Westpac, about $3.9 billion in 2006 to nearly $8.3 billion in 2015; ANZ, almost $4.5 billion in 2006 to more than $7.8 billion in 2015; and NAB, from about $3.6 billion in 2008 to about $5.8 billion in 2015.
Shorten said that the tribunal that the backbenchers advocated “simply won’t cut it”. “There is already an Ombudsman in place but the number of people getting ripped off has been going up and up.
“While the banks have been getting richer, the rip-offs and rackets have been getting worse. The Coalition MPs who say they want to stop these rip-offs have a duty to stand up to Mr Turnbull and tell him anything less than a royal commission is just another cop out,” Shorten said.
Meanwhile the government on Monday morning will release its draft legislation to protect the Victorian Country Fire Authority (CFA) and similar volunteer organisations from union power. Malcolm Turnbull promised the legislation after the issue blew up dramatically before the election, with a push from the United Firefighers Union (UFU) through a new enterprise agreement.
Turnbull and Employment Minister Michaelia Cash say in a statement: “As enterprise agreements are governed by federal legislation – the Fair Work Act – we are intervening to amend the act to ensure that these agreements cannot be misused to undermine volunteer emergency services organisations”.
They say the proposed CFA agreement discriminates against volunteers and provides the union with an unwarranted amount of control over volunteer operations.
The legislation “will invalidate terms in enterprise agreements that undermine the capacity of firefighting or state emergency service bodies to properly manage their volunteer operations”.
It will also give volunteer organisations the right to make submissions to Fair Work Commission agreement approval proceedings – a right they presently do not have.
“This long-running debacle has now resulted in the resignation of the Victorian emergency services minister and the CFA CEO as well as the sacking of the CFA board, who refused to capitulate to the militant United Firefighters Union’s demands. We will not stand by and let the discriminatory and offensive terms of this agreement undermine the effective use of the CFA’s volunteer firefighters,” the statement said.
Michelle Grattan is professorial fellow, University of Canberra and author for The Conversation. She can be contacted <a href="https://theconversation.com/profiles/michelle-grattan-20316" target="_blank">here</a>.
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