Suncorp shares slip as loan arrears climb
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More news: Shares in Suncorp Group were down 0.9% to $16.23 after its banking unit flagged worsening home loan arrears due to the impact of high interest rates on households.
Suncorp Bank, which is set to be merged with ANZ in a $4.9 billion deal, said loans in arrears beyond 90 days climbed $85 million in the March quarter to $510 million, and now account for 0.73% of gross loan assets. The bank also reported a healthy increase in home and business lending.
Home lending and bad loans rise at ANZ target Suncorp Bank
The news: Suncorp Bank has lifted home and business lending in the March quarter but flagged a worsening in home loan arrears as high interest rates impact households.
The numbers: The bank, which is soon to be merged with big four lender ANZ, increased its home loan book by $803 million or 1.4% in the March quarter. Business lending grew $69 million or 0.6%, while retail deposits jumped by 34.8% on an annualised basis.
However, loans in arrears beyond 90 days also climbed $85 million in the quarter to $510 million, and now account for 0.73% of gross loan assets.
The context: The Queensland-focused lender said the rise in loan arrears was largely driven by a worsening in home loans portfolio, as well as a $31 million increase across all business lending portfolios, reflecting the impact of rising interest rates and inflationary pressures.
Still, the bank’s capital levels remain sound, with a common equity tier 1 ratio of 10.27%, within the target operating range of 10% to 10.5%. It reported a contraction in commercial property lending, down $83 million due to refinancing and intense competition.
Suncorp’s $4.9 billion sale of the banking unit to ANZ received approval from the competition tribunal in February and is set to be completed later this year after approval by Treasurer Jim Chalmers and the Queensland government.
The source: ASX announcement
