The BNK Banking Corporation Ltd (ASX: BBC) share price has surged 37.63% so far today, as investors react to a COVID-19 trading update the bank released to the market this morning.
BNK is a digital bank that offers home and personal loans, insurance, term deposits, everyday and saving accounts.
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What did BNK Banking announce?
BNK provided the market with a trading update for the months of April and May 2020. One of the highlights included growth in its total loan book to $47.3 billion, which represents a year-on-year (YoY) increase of 18%.
In addition, BNK's deposit growth was up 36% YoY to $363 million and transaction accounts grew to $109 million, which is up 100% YoY. The group has $108 million of cash and liquid holdings and a capital adequacy ratio of 20.97%.
As a result of strong growth, BNK reported that it is operating profitably in the 2020 calendar year to date.
Interim CEO Don Koch said:
BNK as a group has navigated the COVID disruption well, continuing to grow profitability over the period. Finsure has been a star out-performer achieving record volumes over the period and growing market share. The group remains well capitalised with a strong balance sheet and has made significant progress with diversification of funding over the period.
The BNK-owned Finsure is a nationwide network of independent mortgage brokers. The brokerage has reported strong settlement volumes of $1.35 and $1.45 billion in April and May 2020, respectively, up 32% YoY. Finsure's aggregation loan book of $44.7 billion is up 20% YOY.
BNK also reports that requests for relief packages (which include loan payment deferrals) because of COVID-19 have remained very low, with only 2 requests received in June 2020.
About BNK Banking
BNK has two key operating divisions in banking and mortgage broking aggregation. The group seeks to become a challenger bank and is looking to grow its network and partner opportunities.
It has operated as an APRA-regulated authorised deposit-taking institution (ADI) for over 38 years. As a result, customers are covered for deposits up to $250,000 by the Australian government deposit guarantee scheme. Additionally, it plans to offer a new range of products later this financial year and keep developing its digital platform.
Finsure is the bank's aggregation division, which provides insights that assist BNK with product development. The group disclosed in its update it has 1,716 mortgage brokers that manage a loan book of $44.7 billion (as at 31 May 2020).
The BNK Banking share price is currently trading for 64 cents, which is down 3.03% on this time last year but up 3.2% since the start of 2020.
