Key Highlights

  • Statutory NPAT was a loss of $3.7 million, down 389% on FY25, driven by a $3.5 million Goodwill impairment.
  • Underlying NPAT was a profit of $1.0 million, down 74% on FY25, achieved without any portfolio sale transactions during the year.
  • Net Interest Income increased 10% to $24.0 million, with Net Interest Margin improving 44 basis points to 1.96%.
  • BNK's lending book reached $994 million, a 10% increase from 30 June 2025, supported by entry into senior secured investments.

BNK Banking Corporation Limited (ASX:BBC) reported its financial results for the 12 months to 30 June 2026 (FY26), recording a statutory net loss after tax of $3.7 million, down 389% on FY25, after the Impairment of the company's remaining goodwill of $3.5 million. Underlying NPAT, which excludes this impairment, was a profit of $1.0 million, down 74% on the prior year.

The company noted that this Underlying Profit was achieved without any portfolio sale transactions occurring during the year, in an environment of heightened funding competition. CEO Steve Kinsella said the result demonstrated delivery of the company's focus on improving margins and returns while seeking selective growth in the balance sheet, noting that net interest income and net interest margin both improved on the prior year.

Net Interest Margin Improves on Lending Diversification

Net Interest Income increased 10% to $24.0 million, while Net Interest Margin improved to 1.96%, up 44 basis points on FY25. Net Income rose 3% to $26.8 million. The company continued its expansion into Commercial lending during the year, which reached 25% of the total lending portfolio, while lending activity further diversified into Senior Secured programs, representing 4% of the portfolio and providing what the company described as attractive returns on capital. BNK also launched its NCD funding program during the year.

BNK's total lending book reached $994 million, a 10% increase from 30 June 2025, supported by the company's entry into senior secured investments. The commercial Loan book surpassed $247 million as selective growth continued. Operating expenses increased 10% to $26.6 million, which the company attributed to an uplift in employment costs through targeted, clearly defined roles to support ongoing growth.

Asset Quality Improves Despite Rate Environment

In an upward rate environment, BNK reported that arrears levels decreased within its residential portfolio and remained within management's tolerances for its Commercial book. The 90+ day residential home loan arrears rate fell to 0.47% from 1.20% at 30 June 2025, while 90+ day commercial loan arrears fell to 0.87% from 0.95%. At a combined portfolio level, arrears greater than 90 days equated to 0.58%.

The Credit loss provision increased during the year by $575,000, which the company said largely reflects the growth in the commercial lending portfolio. During the year, BNK's deposit funding composition shifted toward a greater share of Term Deposits, up 20%, as more customers sought higher rates in a competitive market across online deposit channel providers. The Deposit-to-Loan Ratio stood at 107% at year end, which the company said provides a stable funding base.

Capital Position and FY27 Outlook

The company's Capital Adequacy Ratio was 24.6% at 30 June 2026, down from 28.7% a year earlier. Net Tangible Assets per share stood at $0.99. Mr Kinsella said the company's cost growth represents an increase in overall capability to deliver on its strategy, as well as the early stages of a transformational technology Investment intended to uplift broker partner and customer experience, drive further Volume growth, and enable productivity enhancement and greater operational scalability.

Mr Kinsella said BNK's risk management capabilities continue to be uplifted in response to increased challenges posed by technological advances such as AI, alongside broader expectations of higher industry standards from the community and customers. He said the year had generated foundations to deliver tangible and meaningful progress through the course of FY27, while noting that although significant portfolio sale transactions are expected to continue, their timing can lead to variable outcomes in any defined reporting period.

Conclusion

BNK Banking Corporation's FY26 results were dominated by the impact of a $3.5 million goodwill impairment, which pushed the company to a statutory net loss for the year even as underlying operating metrics showed improvement in net interest income and margin. The reduction in arrears across both residential and commercial books, combined with continued Diversification into commercial and senior secured lending, points to a lending portfolio that management describes as being managed prudently through a period of heightened funding competition, with technology investment set to be a focus into FY27.