Bendigo and Adelaide Bank Ltd (ASX: BEN) has been in the news in relation to its move for acquiring Keystart’s residential mortgage loan book portfolio worth over $1.35 billion. Two key things to note here are:
Move as a commitment to Western Australia:Keystart was established by the WA government in 1989 and offers low deposit and shared equity-residential home loans to eligible West Australians who are unable to obtain finance from private lenders. The customers who had taken home loans have built a track record in repaying their loans and Keystart has an outstanding record of low losses as compared to the broader market. Bendigo would now acquire over 6,000 residential home loans from the state’s Keystart Housing Scheme Trust, a low deposit loan scheme helping people enter the property market and the average loan size is $225,000. The customers in the portfolio which the bank is acquiring have, on average, have a five years of loan repayment track record. One third of the loans cover regional WA with the rest in Perth. The bank has paid $2.7 million for the portfolio which is a premium of 0.2%. Meanwhile, the loan book is bought using a non-underwritten share price plan in October and the whole deal is expected to be completed by December. As per Housing Minister Brendon Grylls, there would be business as usual for the Keystart customers. Moreover, there would be no change to the service levels or terms and conditions for existing Keystart customers.
Bendigo’s solid track record won them the deal: The selection of a partner to whom the loan portfolio should be sold was chosen carefully by Keystart and the State Government, and Bendigo and Adelaide Bank’s win indicates their track record in partnering and offered the best value to the State. With this acquisition, the bank would strengthen their current business in Western Australia as well as enhance their geographic diversification by improving their proportion of the loan book in Western Australia from over 11% to 13%. The bank is also seeing an opportunity to sell their complementary products and services to Keystart customers. Bendigo and Adelaide Bank is Australia’s fifth largest retail bank and had a long and established history in the Australian residential mortgage market.
Disclaimer
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376).The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our
Terms & Conditions has been provided please go through them and also have a read of the
Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd currently hold positions in: BHP, BKY, KCN, PDN, and RIO. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.