St George grows deposits but not loans

St George benefited from the retail deposit flight to quality during 2008, boosting retail deposits by one fifth to $57 billion, as investors felt more secure lodging funds with major Australian banks. Cash investors chased yield, moving funds from low interest accounts to term deposits, which jumped 57 per cent to $23 billion, with growth strongest in the second half, climbing 32 per cent.

The directsaver products also performed well, up 15 per cent to $9.1 billion. Transaction accounts increased three per cent to $18 billion, with savings falling five per cent to $554 million and investment accounts off nine per cent to $6.4 billion. Retail funding provides just over half of total retail funding and other borrowings at St George, but the percentage continues to trend down.

In September 2007 retail deposits funded 54 per cent, 60 per cent a year earlier, with 62 per cent in 2005 and 63 per cent in 2004. The bank has been pursuing an expansion strategy to do more business outside NSW. Over the past year it opened one new branch in Western Australia, one in Victoria and four in Queensland. It installed 50 new ATMs.

Home loan receivables were up 9.1 per cent from $69.2 to $75.5 billion over the year. Growth in the bank's home lending business lagged system, which St George chief executive Paul Fegan put at 11.6 per cent, because of the six per cent growth in New South Wales. Unsecured personal loan arrears actually decreased during the period from 1.9 per cent last year to 1.6 per cent this year, while credit card arrears remain stable. Total consumer loans fell 10 per cent to $6.9 billion, due to margin lending falling by a third to $2.1 billion. Personal loans increased eight per cent to $3.1 billion, with credit cards up 14 per cent to $1.7 billion.

Source: The Sheet

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