• Underlying NPAT up 250% YoY, driven by 29% increase in Net Interest Income and 187% increase in Other Income
• NIM improved 47bps to 1.39%, with further 19bps increase from 2H24
• Cost-to-Income ratio improved 35% YoY to 81%, reflecting positive jaws

BNK Banking Corporation Ltd reported a solid set of H1 FY25 results, reflecting the successful execution of its strategic shift towards higher-margin lending. Underlying NPAT increased by $3.0m (250%) compared to H1 FY24, driven by a 29% increase in Net Interest Income and a 187% increase in Other Income. The company's Net Interest Margin (NIM) improved by 47bps to 1.39%, with a further 19bps increase from 2H FY24, as a result of active asset and liability management, including optimising the funding mix and improving yields from the loan book. The lending portfolio repositioning continued, with higher-margin assets now comprising around 22% of the total portfolio. Lending settlements declined 29% compared to H1 FY24, in line with the strategic focus on selective, capital-efficient growth. The quality and profitability of the portfolio remained strong, with improved arrears levels and a well-positioned LVR mix.Operating expenses increased 11% compared to H1 FY24, reflecting ongoing investment in the company's technology transformation. However, the Cost-to-Income ratio improved by 35% to 81%, demonstrating positive jaws and the company's disciplined approach to cost management.BNK remains well-capitalised, with a Capital Adequacy Ratio of 26.98%, providing capacity to pursue its strategic direction. The company is focused on achieving its medium-term targets of a NIM above 2%, a ROE above 10%, and a Cost-to-Income ratio below 60%.

BNK is targeting a 30% concentration of higher-margin assets to attain optimal capital efficiency, and aims to increase its Net Interest Margin to over 2% over the medium term.

BNK remains focused on diversifying its income streams, optimising its asset mix, and maintaining cost discipline to drive sustainable, profitable growth. The company will continue to pursue high-margin and/or high return-on-capital opportunities, including inorganic growth and white label partnerships, while advancing its technology transformation to support long-term value creation.