BNK Banking Corporation Limited has reported a significant turnaround in its FY25 financial results, driven by margin expansion and a robust capital position. The bank’s strategic portfolio reshaping and disciplined cost management underpin its improved profitability and outlook.
- Underlying NPAT up 509% year-on-year
- Net Interest Margin improved to 1.52% for FY25, 1.70% in 2H25
- Capital Adequacy Ratio strengthened to 29.0%
- Loan book strategically reduced with focus on higher-margin assets
- Operating expenses increased 12% but cost discipline maintained
A Clear Turnaround in FY25
BNK Banking Corporation Limited (ASX – BBC) has delivered a marked turnaround in its financial performance for the fiscal year ending 2025. The company reported a 509% increase in underlying net profit after tax (NPAT) compared to FY24, reflecting the success of its strategic shift towards higher-margin, capital-efficient assets. This improvement was accompanied by a 50% rise in net income and a 46 basis point expansion in net interest margin (NIM), which reached 1.52% for the full year and 1.70% in the second half alone.
Strategic Portfolio Reshaping and Capital Strength
BNK’s management executed key strategic initiatives during FY25, including the optimisation of warehouse assets and a deliberate reduction in the loan book size through the sale of $220 million in Bendigo prime warehouse assets. This portfolio reshaping has increased the proportion of higher-margin assets to nearly 28%, approaching the bank’s medium-term target of 30%. The capital adequacy ratio strengthened significantly to 29.0%, providing ample buffer and flexibility for future growth without immediate capital needs.
Cost Discipline Amidst Growth
Operating expenses rose by 12% year-on-year, reflecting targeted investments in technology transformation and regulatory compliance enhancements. Despite this increase, BNK maintained disciplined cost management, improving its cost-to-income ratio by 12% to 93%. The bank’s focus on efficiency and scalability lays a solid foundation for sustainable profitability as it pursues further growth in high-margin lending segments.
Credit Quality and Risk Management
Credit quality remained stable despite the shift towards higher-margin loans. Arrears were broadly steady, with only 1.10% of the residential loan book and 0.95% of the commercial loan book in arrears over 90 days. Mortgagee in possession rates remained at zero, underscoring the resilience of BNK’s lending portfolio. The bank also maintained strong provisioning levels to protect against potential credit losses amid ongoing economic uncertainties.
Looking Ahead – Growth and Margin Expansion
BNK’s outlook focuses on continuing the momentum built in FY25 by increasing the concentration of higher-margin assets, aiming to push the net interest margin above 2% over the medium term. The bank plans to scale senior secured warehouse funding, reintroduce moderated prime residential volume, and pursue strategic partnerships and product expansion. Technology investment remains a priority to support operational scalability and regulatory compliance.
Bottom Line?
BNK’s FY25 results mark a decisive step in its turnaround journey, setting the stage for sustained margin growth and strategic expansion.
Questions in the middle?
- How will BNK balance growth in higher-margin assets with maintaining credit quality?
- What impact will ongoing competition in deposits and loans have on BNK’s margin targets?
- How quickly can BNK scale its senior secured warehouse funding to support growth?