Heritage Bank aims to triple the size of its business banking portfolio over the next three years, as part of a strategy to diversify both product and geographic weightings, Chairman Kerry Betros told today’s Annual General Meeting (AGM).
Mr Betros said Heritage would significantly expand its existing business banking division, revamping all aspects from product offerings and processing capabilities to distribution channels.
That will help bring greater diversification for Heritage’s balance sheet, which is currently more than 95% reliant on housing loans.
“We currently have a relatively small business banking division, which specialises in looking after the needs of Small to Medium Enterprises (SMEs) in south-east Queensland,” Mr Betros said.
“People in the small business sector really appreciate the personalised service that the Heritage business banking team is renowned for.
“We’ll maintain that focus on the SME sector, but what we want to do is expand our reach and open up the Heritage experience to more small businesses.
“That will mean taking different approaches, such as moving into the business broker area and securing customers outside Queensland.
“The goal is to more than triple the size of our business banking portfolio by 2022.” Mr Betros said Heritage would also seek to diversify its books by securing a greater proportion of lending from outside Queensland in the decade ahead.
Heritage opens its first branch outside Queensland at Castle Hill in Sydney tomorrow (31 October) and will open a second at Parramatta in December.
The aim is to open more branches in western Sydney in coming years, as well as branches in selected parts of Melbourne as well.
“We’ve built up an existing client base outside Queensland through our mortgage broker partnerships over the last 20 years,” he said
“By establishing physical branches in Sydney and Melbourne, our aim is to build that client base in those areas and ensure a higher proportion of our lending comes from outside Queensland.”
Mr Betros said today’s AGM also approved a number of minor amendments to Heritage’s constitution.
These changes enable Heritage to take advantage of the newly passed Treasury Laws Amendment (Mutual Reforms) Bill 2019, which allow mutuals to issue capital-raising instruments without losing their mutual status.
“Access to capital has always been a limiting factor on the ability of mutuals to expand and offer greater competition to the big banks. This new legislation has overcome many of those hurdles,” he said.
“However, the devil is in the detail, and there is still much work to do before mutuals will be in a position to issue a capital-raising instrument. We have to be sure that the benefits in doing so will outweigh the costs.
“Heritage will continue to lead the customer-owned sector in investigating how we can best take advantage of this legislation.” Mr Betros told today’s AGM that a highlight of 2019 had been making the Heritage Bank Charitable Foundation operational.
“I announced at the 2018 AGM that we intended to launch the Heritage Bank Charitable Foundation, to provide grants to worthy charitable organisations around the country. “
I’m happy to say that we’ve completed all legal and logistical requirements to make the Foundation operational, and it is now accepting tax-deductible donations from the public. We aim to start providing our first grants in 2020.
“Creating lasting legacies and providing community benefits are core to the Heritage Bank model and making the Foundation operational is one of our proudest achievements in 2018/19.”