BNK Banking Corporation reported a 31% rise in statutory profit for the first half of 2026, driven by loan book growth and improved net interest margins despite a sharp drop in underlying profit.
- Statutory NPAT up 31% to $0.42 million
- Underlying NPAT down 76% to $0.44 million
- Loan book grows 9% to $983 million
- Net interest margin improves by 49 basis points to 1.88%
- 90+ day loan arrears increase but no losses incurred
Solid Growth Amid Portfolio Rebalancing
BNK Banking Corporation Limited has reported its financial results for the first half of 2026, revealing a mixed but cautiously optimistic picture. The company’s statutory net profit after tax (NPAT) rose 31% to $0.42 million compared to the same period last year, signalling some success in its strategic initiatives. However, underlying NPAT fell sharply by 76% to $0.44 million, highlighting underlying pressures that warrant closer scrutiny.
Key to BNK’s performance was a 9% expansion in its loan book to $983 million, supported by a deliberate shift towards higher-return lending segments. The commercial loan portfolio surpassed $190 million, reflecting measured growth and diversification efforts. Additionally, BNK’s entry into senior secured investments marks a strategic move to enhance capital efficiency and income streams.
Margin Improvement and Cost Discipline
Net interest income increased 5% to $11.6 million, underpinned by a 49 basis point improvement in net interest margin to 1.88%. This margin uplift is a positive sign that BNK’s portfolio rebalancing towards higher-yielding assets is bearing fruit. Operating expenses remained flat at $12.2 million, reflecting disciplined cost management amid ongoing competitive pressures.
BNK’s deposit-to-loan ratio stands at a healthy 105%, providing a stable funding base that supports its growth ambitions. The capital adequacy ratio, while slightly down from 28.7% to 27.0%, remains robust, ensuring the bank is well capitalised to absorb potential shocks.
Rising Arrears and Risk Management
One area of concern is the increase in loan arrears. Residential home loan arrears over 90 days rose from 1.20% to 1.37%, while commercial loan arrears nearly doubled from 0.95% to 1.84%. Despite this uptick, BNK emphasised that the absolute number of affected customers remains low and that no losses were incurred during the period. The bank maintains appropriate provisioning and continues to monitor credit risk closely.
CEO Allan Savins highlighted the company’s cautious approach: "With a strong capital adequacy ratio and a structurally improved earnings mix, BNK enters the second half well positioned to selectively grow higher-return segments while maintaining disciplined risk and funding management."
Outlook and Strategic Focus
Looking ahead, BNK plans to continue optimising its asset mix by reducing lower-margin residential loans and increasing exposure to higher-return categories. The bank also intends to explore inorganic growth opportunities and distribution partnerships that align with its strategic goals. Despite competitive intensity, BNK expects its diversified income streams and portfolio shifts to support sustainable profit generation.
Investor confidence will likely hinge on how effectively BNK manages rising arrears and sustains margin improvements while navigating a challenging economic environment marked by high interest rates and inflationary pressures.
Bottom Line?
BNK’s strategic pivot towards higher-return lending and disciplined management sets the stage for cautious optimism, but rising arrears warrant close attention.
Questions in the middle?
- What factors contributed to the steep decline in underlying NPAT despite statutory profit growth?
- How will BNK manage the rising commercial loan arrears amid economic uncertainties?
- What specific inorganic growth opportunities and partnerships is BNK considering?