BNK Bank
Annual Report 2024

Plain-text annual report

BNK Banking Corporation Limited Level 14, 191 St Georges Terrace Perth WA 6000 bnk.com.au | info@bnk.com.au | 1300 BNK BANK | ABN 63 087 651 849 | AFSL/Australian Credit License 246884 | BSB 806043 BNK Banking Corporation Limited – Half Year Report (Appendix 4D) for the half year ended 31 December 2024 The Directors of BNK Banking Corporation Limited (the “Company”) are pleased to announce the results of the Company for the half year ended 31 December 2024 as follows: Results for announcement to the market Extracted from the Interim Financial Statements for the half year ended Movement $’000 31 December 2024 $’000 31 December 2023 Revenue from operations 58% 12,757 8,065 Profit/(loss) after tax attributable to Members 118% 320 (1,816) No dividend was paid or declared by the Company in the period and up to the date of this report. No dividends were paid or declared by the Company in respect of the previous half year 31 December 2024 31 December 2023 Net Tangible Assets per share $0.99 $1.00 The remainder of the information requiring disclosure to comply with Listing Rule 4.2A is contained in the attached copy of the Interim Financial Statements and comments on performance of the Company included in the Investor Presentation dated 26 February 2025. Further information regarding BNK Banking Corporation Limited and its business activities can be obtained by visiting the Company’s website at bnk.com.au. Yours faithfully Jennifer Spicer Company Secretary BNK Banking Corporation Limited ABN 63 087 651 849 Interim Financial Report For the six months ended 31 December 2024 BNK Banking Corporation Limited Interim Financial Report 31 December 2024 Page 2 of 23 CONTENTS CORPORATE INFORMATION ..................................................................................................................................... 3 DIRECTORS’ REPORT ................................................................................................................................................. 4 AUDITOR’S INDEPENDENCE DECLARATION .............................................................................................................. 6 CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION ...................................................................... 7 CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME .............. 8 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ....................................................................... 9 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS ................................................................................. 10 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS ................................................. 11 DIRECTORS’ DECLARATION ..................................................................................................................................... 21 INDEPENDENT AUDITOR’S REVIEW REPORT .......................................................................................................... 22 BNK Banking Corporation Limited Interim Financial Report 31 December 2024 Page 3 of 23 CORPORATE INFORMATION ACN: 087 651 849 Directors Mr. Jon Denovan (Chairman and Non-Executive Director) Ms. Elizabeth Aris (Independent Non-Executive Director) Mr. Calvin Ng (Independent Non-Executive Director) Mr. David Gration (Non-Independent Non-Executive Director) Mr. Warren McLeland (Non-Independent Non-Executive Director) Company Secretary Ms Jenifer Spicer The registered office and principal place of business of the Company is: Level 14, 191 St George’s Terrace Perth WA 6000 Phone: +61(8) 9438 8888 Other Locations: Gold Coast Office Level 5, 50 Cavill Avenue Surfers Paradise Qld 4217 Sydney Office Level 11, 9 Castlereagh Street Sydney NSW 2000 Share Registry: Automic Group Level 5, 126 Phillip Street Sydney NSW 2000 Tel +61 2 9698 5414 Tel 1300 288 664 Exchange Listing Australian Securities Exchange Limited Level 40, Central Park 152-158 St George’s Terrace Perth WA 6000 ASX Code: BBC Auditors: Grant Thornton Audit Pty Ltd Grosvenor Place Level 26, 225 George Street Sydney NSW 2000 Website Address: www.bnk.com.au Corporate Governance: A copy of the Corporate Governance Policy Statement can be located using the following website address: https://bnk.com.au/investor-centre/corporate-governance/ BNK Banking Corporation Limited Interim Financial Report 31 December 2024 Page 4 of 23 DIRECTORS’ REPORT The Directors present their report on the consolidated entity comprising BNK Banking Corporation Limited (“BNK” or the “Company”) and the entities it controlled (“the Group”) as at or during the half-year ended 31 December 2024. DIRECTORS The names of the Company’s Directors in office during the half-year and until the date of this report are set out below. Directors were in office for the entire period unless otherwise stated. Mr J Denovan Chairman and Non-Executive Director Ms E A Aris Non-Executive Director Mr K W Ng Non-Executive Director Mr D Gration Non-Executive Director Mr W McLeland Non-Executive Director PRINCIPAL ACTIVITIES The principal activities of the Group were the provision of retail banking and wholesale mortgage management. The Group provides banking products and services such as loans and deposits under the BNK, Goldfields Money and Better Choice brands. Loans are distributed through the Better Choice business, via online applications with the accredited broker network, and may be funded by deposits, securitisation vehicles or third-party funders. Existing securitised funding warehouses remain in place with Goldman Sachs ($500m) and Bendigo & Adelaide Bank ($300m) along with a self-securitisation warehouse of $300m. Introducer broker channels receive commissions for loan origination and ongoing trail. Better Choice Wholesale earns and pays commissions on the loan books from the white label funders. Deposits are originated under the Goldfields Money / BNK brand directly and through third party deposit brokers. The Group earns net interest income and service fees from providing a range of services to its retail and small business customers. RECONCILIATION BETWEEN THE STATUTORY RESULTS (IFRS) AND THE MANAGEMENT REPORTED (NON IFRS) RESULTS The discussion of operating performance in the operating and financial review section of this report is presented on a statutory basis under IFRS with certain adjustments to reflect a management reported basis of the underlying performance of the business, unless otherwise stated. Management reported results are non-IFRS financial information and are not directly comparable to the statutory results presented in other parts of this financial report. A reconciliation between the two is provided in this section and the guidance provided in Australian Securities and Investments Commission Regulatory Guide 230 'Disclosing non IFRS financial information' ('RG 230') has been followed when presenting the management reported results. Non-IFRS financial information has not been audited by the external auditor but has been sourced from the financial reports. The reconciliation between the statutory results (IFRS) and the management/underlying reported (non-IFRS) results is presented below: 1H25 1H24 Change Statutory Net Profit/(Loss) After Tax ($’000s) 320 (1,816) 118% Expense adjustments • CBS Replacement Project implementation costs 845 - Non-Cash Elements • Movement in Contract Assets/Contract Liabilities 1,252 899 Tax effect of adjustments (631) (258) Underlying Net Profit/(Loss) after Tax ($’000s) (Management-reported results) 1,786 (1,175) 252% BNK Banking Corporation Limited Interim Financial Report 31 December 2024 Page 5 of 23 DIRECTORS’ REPORT (cont’d) REVIEW AND RESULTS OF OPERATIONS The Group recorded an underlying net profit after tax from operations of $1.79 million for the half-year ended 31 December 2024, an improvement of $3.0m (252.0%) on the prior comparative period. Statutory net profit after tax of $0.3m resulted in earnings per share of 0.27 cents per share, an increase of 118% from H1 FY24: (loss of (1.53) cents per share). Net interest income of $11.1m resulted in a 29% uplift from H1 FY24 being $8.6m, whilst operating expenses increased by 18.8% to $12.2m. Within operating expenses, the group has incurred $0.8m of contracted costs in relation to the replacement of a Core Banking System (excluded from Underlying net profit). The Group’s Average Net Interest Margin (NIM) for the 6 months to 31 December 2024 was 1.39%, up from 1.06% for the 12-month period to 30 June 2024 and 0.92% for the comparable six-month period to 31 December 2023. The increase in NIM has been driven by shifts in the composition of the Group’s assets and liabilities. Lending settlements dropped 29% during the half year to $261m compared to the period to 31 December 2023. This was expected as the Group continues its focus on selective higher margin lending and a reduced focus on prime residential loans. The total managed loan book, excluding offset balances, decreased to $2.3bn (30 June 2024: $2.5bn) of which the directly funded loan book decreased 14% to $1.18bn (30 June 2024: $1.37bn). The loan book comprises 92% residential mortgages with an average weighted loan to valuation ratio of 60.45%. The Commercial loan book increased 24.3% from 30 June 2024 to $95.0m at 31 December 2024 with average weighted loan to valuation of 61.74%. Credit quality remains strong with loans more than 90 days in arrears equating to 0.6% of total loans. The Group maintained a capital adequacy ratio of 26.98% compared to 23.36% at 30 June 2024 and 19.85% at 31 December 2023. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS There have been no significant changes in the state of affairs during the reporting period. EVENTS SUBSEQUENT TO BALANCE DATE On 21/02/2025, Bendigo Bank reached an agreement with the Bullion Trust to purchase $220.6m of Residential Home Loans. The transaction will generate a net profit of approximately $2m, subject to finalisation of treatment, to be reflected in H2 FY25. On the effective date of settlement, the loans being sold will cease to be held on the balance sheet but will continue to be serviced by the Group, for which the Group will receive Servicing Fee income. In the opinion of the Directors, there have been no other matters arising in the period between the end of the reporting period and the date of this report that are likely to significantly affect the operations of the Group. AUDITOR'S INDEPENDENCE DECLARATION A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out immediately after this Directors' Report. ROUNDING These consolidated financial statements are presented in Australian dollars which is the Company’s functional currency. The Group is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 and in accordance with that instrument, amounts in the consolidated financial statements and Directors’ Report have been rounded off to the nearest thousand dollars, unless otherwise stated. This report is made in accordance with a resolution of directors, pursuant to section 306(3)(a) of the Corporations Act 2001. Jon Denovan Chairman and Non-executive Director Dated this 26th day of February 2025 Grant Thornton Audit Pty Ltd Level 26 Grosvenor Place 225 George Street Sydney NSW 2000 Locked Bag Q800 Queen Victoria Building NSW 1230 T +61 2 8297 2400 w #13078216v3 www.grantthornton.com.au ACN-130 913 594 Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Limited ABN 41 127 556 389 ACN 127 556 389. ‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Limited is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 ACN 127 556 389 and its Australian subsidiaries and related entities. Liability limited by a scheme approved under Professional Standards Legislation. Auditor’s Independence Declaration To the Directors of BNK Banking Corporation Limited In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the review of BNK Banking Corporation Limited for the half-year ended 31 December 2024. I declare that, to the best of my knowledge and belief, there have been: a no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and b no contraventions of any applicable code of professional conduct in relation to the review. Grant Thornton Audit Pty Ltd Chartered Accountants C L Scott Partner – Audit & Assurance Sydney, 26 February 2025 BNK Banking Corporation Limited Interim Financial Report 31 December 2024 Page 7 of 23 CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2024 In thousands of AUD Note 31 Dec 2024 $ 30 Jun 2024 $ Assets Cash and cash equivalents 11 129,078 118,352 Due from other financial institutions 12 108,012 91,972 Other financial assets 14 113,210 115,113 Loans and advances 15 1,185,042 1,378,211 Trade and other receivables 13 3,000 5,881 Contract assets 9,518 11,421 Property, plant and equipment 63 189 Goodwill and other intangible assets 16 3,762 3,771 Total Assets 1,551,685 1,724,910 Liabilities Deposits 17 1,097,091 1,270,643 Other financial liabilities 19 321,696 321,438 Trade and other payables 18 5,807 5,296 Trail commission payable 2,881 3,532 Provisions 1,055 985 Deferred tax liabilities (net of assets) 2,079 1,899 Total Liabilities 1,430,609 1,603,793 Net Assets 121,076 121,117 Equity Attributable to Equity Holders Contributed equity Issued capital, net of raising costs 20 100,329 100,329 Reserves 1,281 1,641 Retained earnings 19,466 19,147 Total Equity 121,076 121,117 The accompanying notes should be read in conjunction with the financial statements BNK Banking Corporation Limited Interim Financial Report 31 December 2024 . Page 8 of 23 CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 31 DECEMBER In thousands of AUD Note 31 Dec 2024 31 Dec 2023 $ $ Interest revenue from banking activities 6 45,749 46,784 Interest expense on banking activities 6 (34,699) (38,229) Net interest income 11,050 8,555 Commission income 7 1,064 3 Commission expense 7 (3,326) (1,877) Net commission expense (2,262) (1,874) Other income 8 3,969 1,384 Total net revenue 12,757 8,065 Operating expenses 9 (12,242) (10,307) Impairment of loans, advances and other receivables 15 85 (352) Profit/(Loss) before income tax 600 (2,594) Income tax (expense)/benefit 10 (280) 778 Profit/(Loss) for the period 320 (1,816) Other comprehensive income Items that may be reclassified subsequently to profit and loss - - Total comprehensive profit/(loss) for the period 320 (1,816) Earnings per share Basic earnings per share (cents) 25 0.27 (1.53) Diluted earnings per share (cents) 25 0.27 (1.53) The accompanying notes should be read in conjunction with the financial statements BNK Banking Corporation Limited Interim Financial Report 31 December 2024 Page 9 of 23 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 31 DECEMBER In thousands of AUD Attributable to equity holders Issued Capital Equity Raising Costs Treasury Shares Liquidity Reserve Share-based Payments Reserve Retained Earnings Total Equity $ $ $ $ $ $ $ Balance at 30 June 2024 103,664 (3,335) - 360 1,281 19,147 121,117 Profit for the period - - - - - 320 320 Total comprehensive income - - - - - 320 320 Transactions with owners of the Company Special purpose vehicle reserve - - - (360) - - (360) Issue of share capital - - - - - - - Balance at 31 December 2024 103,664 (3,335) - - 1,281 19,466 121,076 Balance at 30 June 2023 103,664 (3,335) (103) 725 1,281 25,951 128,183 (Loss)/Profit for the period - - - - - (1,816) (1,816) Total comprehensive income - - - - - (1,816) (1,816) Transactions with owners of the Company Special purpose vehicle reserve - - - (267) - - (267) Issue of share capital - - - - - - - Balance at 31 December 2023 103,664 (3,335) (103) 458 1,281 24,135 126,100 The accompanying notes should be read in conjunction with the financial statements BNK Banking Corporation Limited Interim Financial Report 31 December 2024 Page 10 of 23 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED 31 DECEMBER 31 Dec 2024 31 Dec 2023 Note $ $ In thousands of AUD CASH FLOWS FROM OPERATING ACTIVITIES Interest received 45,749 46,784 Fees and commissions received 6,965 3,445 Interest and other costs of finance paid (34,175) (37,781) Payments to suppliers and employees (11,527) (15,279) Net decrease/(increase) in loans, advances and other receivables 191,831 (125,927) Net (decrease)/ increase in deposits (173,553) 296,242 Payment of income taxes (100) - Net payments for investments (14,136) (103,169) Net cash from operating activities 11,054 64,315 CASH FLOWS FROM INVESTING ACTIVITIES Receipts for sale of property, plant and equipment - 15 Payment for property, plant and equipment (34) (18) Net cash used in investing activities (34) (3) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from borrowings 257 10,527 Repayment of borrowings (361) (14,089) Payments for lease liabilities (190) (182) Net cash used in financing activities (294) (3,744) Net increase in cash held 10,726 60,568 Cash and cash equivalents at 1 July 118,352 92,573 Cash and cash equivalents at the end of the period 129,078 153,141 The Consolidated Statement of Cash Flows includes all cash flows of the Group. The accompanying notes should be read in conjunction with the financial statements BNK Banking Corporation Limited Interim Financial Report 31 December 2024 Page 11 of 23 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS 1. CORPORATE INFORMATION BNK Banking Corporation Limited (“the Company”) is a company incorporated and domiciled in Australia. These condensed consolidated interim financial statements (“interim financial statements”) as at and for the six months ended 31 December 2024 comprise the Company and its subsidiaries (together referred to as “the Group”). The principal activities of the Company are the provision of retail banking and wholesale mortgage management. 2. BASIS OF PREPARATION These interim financial statements are general purpose financial statements prepared in accordance with Australian Accounting Standard (AASB) 134 'Interim Financial Reporting' and the Corporations Act 2001, and with IAS 34 'Interim Financial Reporting'. The interim financial statements do not include all the information required for a complete set of annual financial statements. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group’s financial position and performance since the last annual consolidated financial statements as at and for the year ended 30 June 2024. These interim financial statements were authorised for issue by the Company’s Board of Directors on 26th February 2025. The Group is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 and in accordance with the legislative instrument, amounts in the consolidated interim financial statements and Directors’ Report have been rounded off to the nearest thousand dollars, unless otherwise stated. Changes in Accounting Standards A. Changes adopted in the current period. There are no new accounting standards becoming effective during the reporting period that have resulted in changes to the preparation of these condensed consolidated interim financial statements. B. Changes to be adopted in future periods. A number of new standards and amendments to standards are effective for annual periods beginning after 1 January 2025 and earlier application is permitted. The Group has not adopted any of the forthcoming new or amended standards in preparing these condensed consolidated interim financial statements. 3. CRITICAL ACCOUNTING ESTIMATES AND SIGNIFICANT JUDGEMENTS The preparation of these interim financial statements that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. The significant judgements made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those described in the last annual financial statements at 30 June 2024. The Company’s application and measurement of fair values is explained in note 24. 4. CHANGE IN ACCOUNTING POLICY Except as described below, the accounting policies applied in these interim financial statements are the same as those applied in the Group’s consolidated financial statements as at and for the year ended 30 June 2024. The policy for recognising and measuring income taxes in the interim period is consistent with that applied in the previous interim period and is described in note 10. BNK Banking Corporation Limited Interim Financial Report 31 December 2024 Page 12 of 23 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS In thousands of AUD 5. SEGMENT INFORMATION AASB 8 requires operating segments to be identified on the basis of internal information provided to the chief operating decision makers, the Board of Directors, in relation to the Group’s business activities. All elements within this interim financial report to December 2024 relate to the single reporting segment of the Bank. Loans and advances 38,717 38,808 Deposits with other institutions 7,032 7,976 Total interest income 45,749 46,784 Interest expense Deposits 24,810 29,730 Securitisation liabilities 8,728 7,343 Subordinated debt 1,157 1,123 Lease liabilities 2 10 Other 2 23 Total interest expense 34,699 38,229 7. COMMISSION INCOME AND EXPENSE 31 Dec 2024 31 Dec 2023 $ $ Upfront commission income 1,303 30 Trail commission income 1,664 1,997 Movement in net present value of future trail commission receivable (1,903) (2,024) Total commission income 1,064 3 Upfront commission expense 2,278 1,030 Trail commission expense 1,699 1,973 Movement in net present value of future trail commission payable (651) (1,126) Total commission expense 3,326 1,877 8. OTHER INCOME 31 Dec 2024 31 Dec 2023 $ $ Service fees and residual income 2,564 478 Lending fees 582 512 Transaction fees 463 388 Other 360 6 Total other income 3,969 1,384 6. INTEREST INCOME AND EXPENSE 31 Dec 2024 31 Dec 2023 $ $ Interest income BNK Banking Corporation Limited Interim Financial Report 31 December 2024 Page 13 of 23 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS In thousands of AUD 9. OPERATING EXPENSES 31 Dec 2024 31 Dec 2023 $ $ Employee benefits 7,321 7,046 Information technology 2,010 1,147 Professional services 1,195 325 Other administration expenses 795 1,052 Banking services delivery 204 201 Marketing 244 99 Depreciation and amortisation 168 166 Occupancy 163 157 Securitisation expenses 142 114 Total operating expenses 12,242 10,307 10. INCOME TAX 31 Dec 2024 31 Dec 2023 $ $ The major components of income tax benefit recognised are: Current income tax expense 100 - Deferred income tax expense/(benefit) 180 (778) Income tax expense/(benefit) 280 (778) Income tax expense is recognised at an amount determined by multiplying the profit (loss) before tax for the interim reporting period by the annual income tax rate expected for the full financial year, adjusted for the tax effect of certain items recognised in full in the interim period. Deferred income tax expense/(benefit) reflects movements in deferred tax asset and deferred tax liability balances during the year as well as unused tax losses. USE OF JUDGEMENTS AND ESTIMATES Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised. The Group assesses the probability through the consideration of factors leading to losses and the preparation of forecasts that indicate the Group’s ability to generate taxable profits in the future. BNK Banking Corporation Limited Interim Financial Report 31 December 2024 Page 14 of 23 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS In thousands of AUD 11. CASH AND CASH EQUIVALENTS 31 Dec 2024 30 Jun 2024 $ $ Reconciliation of cash: Cash at the end of the period as shown in the statement of cash flows is reconciled to the related items in the statement of financial position as follows: Cash at bank and on hand 94,160 81,750 Cash at Bank – restricted 34,918 36,602 129,078 118,352 Restricted Cash is the cash reserves maintained in accordance with the Bullion Trust Deed and the Primus Trust Deed and is available to meet certain shortfalls in respect to losses and liquidity. The cash is not available as free cash for the operations of the Group without certain predefined conditions being met. 12. DUE FROM OTHER FINANCIAL INSTITUTIONS 31 Dec 2024 30 Jun 2024 $ $ Security deposits 17,620 17,620 Negotiable certificate of deposit and term deposits 70,434 34,528 Other ADI deposits 19,958 39,824 108,012 91,972 13. TRADE AND OTHER RECEIVABLES 31 Dec 2024 30 Jun 2024 $ $ Accrued commission income 213 242 Prepayments 1,603 1,802 Trade and other receivables 1,184 3,837 3,000 5,881 14. OTHER FINANCIAL ASSETS 31 Dec 2024 30 Jun 2024 $ $ Investments in debt securities (measured at amortised cost) 113,210 115,113 113,210 115,113 BNK Banking Corporation Limited Interim Financial Report 31 December 2024 Page 15 of 23 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS In thousands of AUD 15. LOANS AND ADVANCES 31 Dec 2024 30 Jun 2024 $ $ (a) Classification Residential loans 1,082,552 1,291,483 Commercial loans 95,038 76,485 Personal loans 59 35 Overdrafts 3,239 4,716 Total gross loans and advances 1,180,888 1,372,719 Add: Unamortised broker commissions 5,777 6,679 Add: Unamortised premium 1,560 2,081 Gross loans and receivables 1,188,225 1,381,479 Provision for impairment (3,183) (3,268) 1,185,042 1,378,211 (b) Provision for impairment Expected credit loss provision Stage1 Stage 2 Stage 3 Total $ $ $ $ Opening balance at 1 July 2024 1,978 242 1,048 3,268 Movements during the period: Residential loans (122) (81) (153) (356) Commercial loans 104 65 96 265 Bullion warehouse 6 - - 6 Closing balance at 31 December 2024 1,966 226 992 3,183 The decrease in the expected credit loss provision is partly due to the decrease in the gross carrying amount of loans and advances, reflecting a redirection towards Commercial lending, as well as a reduction in the delinquency rates observed and outlined below. (c) Credit quality – loans and advances 31 Dec 2024 30 Jun 2024 $ $ Past due but not impaired 30 days & less than 90 days 4,251 6,589 90 days & less than 182 days 2,486 6,066 182 days or more 3,556 3,973 10,293 16,628 Impaired - mortgage loans Mortgage loans greater than 90 days 644 644 Overdrafts greater than 90 days 29 56 673 700 Total past due and impaired 10,966 17,328 Neither past due nor impaired 1,169,922 1,355,391 Total gross loans and advances 1,180,888 1,372,719 BNK Banking Corporation Limited Interim Financial Report 31 December 2024 Page 16 of 23 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS In thousands of AUD 16. GOODWILL AND OTHER INTANGIBLE ASSETS 31 Dec 2024 30 Jun 2024 $ $ Goodwill 3,500 3,500 Brand names, trademarks and domain names 170 170 Other intangible assets (less accum amortisation) 92 101 Total goodwill and other intangible assets 3,762 3,771 At 31 December 2024, Bank CGU was tested for impairment using the value in use approach, by discounting future cash flows (5 years) estimated from the continuing use of the CGU. The recoverable amount for the CGU was determined to be above the carrying amount. The key assumptions used in the estimation of the recoverable amount are set out below. The values assigned to the key assumptions represent the Group’s best estimates of future CGU performance, after considering internal and external sources of information. Input Dec 2024 Jun 2024 Discount rates (post-tax) 11.9% 11.8% Terminal value growth rate 2.5% 2.5% Budgeted net income growth rate (average of next 5 years) 25% 29% Budgeted cost rates (average of next 5 years) 9% 7% Discount rates were determined after assessing the Group’s weighted average cost of capital and adjusting for risks specific to the CGU and/or the risks inherent to the cash flow forecasts. The cash flow projections include specific estimates from companies considered comparable over five years and a terminal growth rate thereafter. The terminal growth rate was determined based on management’s estimate of the long-term growth rate, consistent with the assumptions that a market participant would expect. Budgeted revenue was based on the Group’s five year forward looking plans for the CGU taking into account past experience and adjustments regarding expectations of future outcomes including economic conditions. No impairment loss has been recognised for the CGU at 31 December 2024. Sensitivity Scenario Management have reviewed both the Long-term growth and discount rate included in the impairment testing. In order to demonstrate the sensitivities within the impairment testing, management has stress tested these two key assumptions to the point at which impairment would be triggered. The two factors stress tested are Discount rate and Net Income growth rate. Input Standard Stressed movement +/ Discount rates (post-tax) 11.9% 6.69% Budgeted NPAT growth rate (average of years 4-5) 40.6% 50.6% The outcomes of these sensitivity tests are; • An increase in the discount rate of 6.69% to 18.61% would result in impairment of the CGU • A reduction in the growth rates in Yrs. 4 and 5 by 50.6% to 4.2% would result in impairment of the CGU Based on the above stress testing, management is satisfied that levels are appropriate and sufficient headroom remains given the approach already taken during the core testing and the stress testing performed. Management will continue to assess the carrying value of goodwill against forward forecasts and economic conditions. BNK Banking Corporation Limited Interim Financial Report 31 December 2024 Page 17 of 23 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS In thousands of AUD 17. DEPOSITS 31 Dec 2024 30 Jun 2024 $ $ Call deposits 704,655 638,999 Term deposits 392,436 631,644 1,097,091 1,270,643 18. TRADE AND OTHER PAYABLES 31 Dec 2024 30 Jun 2024 $ $ Trade creditors and accrued expenses 5,710 5,014 Accrued commission payable 97 94 Lease liabilities - 188 5,807 5,296 19. OTHER FINANCIAL LIABILITIES 31 Dec 2024 30 Jun 2024 $ $ Securitisation liabilities 297,707 297,517 Subordinated debt 23,989 23,921 Total borrowings 321,696 321,438 The Subordinated debt characteristics remain unchanged from the annual financial statements to 30 June 2024. Securitisation liabilities represent the continued utilisation of the securitisation warehouse funding facility established in 2021. The securitisation warehouse has a facility limit of $300 million. 20. SHARE CAPITAL Number of shares 31 Dec 2024 Issued capital $ Beginning of the interim period 118,719,405 103,664 Movements in the period Exercise of performance rights - - Issue Share Options - - Balance at the end of the interim period 118,719,405 103,664 Equity raising costs Balance at the beginning of the interim period (3,335) Costs incurred from exercise of performance rights - Balance at the end of the interim period (3,335) BNK Banking Corporation Limited Interim Financial Report 31 December 2024 Page 18 of 23 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS In thousands of AUD 21. DIVIDENDS No dividends were paid or proposed during the interim period. 22. SHARE-BASED PAYMENTS During the interim period ended 31 December 2024, no new share-based payment arrangements were entered into. 23. COMMITMENTS AND CONTINGENT LIABILITIES 31 Dec 2024 30 Jun 2024 $ $ At the reporting date, the company had the following loan and overdraft commitments outstanding: Loans approved but not advanced 331 2,681 Loan funds available for redraw 59,071 57,064 Unutilised overdraft limits 247 301 59,649 60,046 24. FINANCIAL INSTRUMENTS A. ACCOUNTING CLASSIFICATIONS AND FAIR VALUES Fair value Carrying amount In thousands of AUD 31 Dec 2024 30 Jun 2024 31 Dec 2024 30 Jun 2024 $ $ $ $ Financial assets Cash and cash equivalents 129,078 118,352 129,078 118,352 Due from other financial institutions 108,012 91,972 108,012 91,972 Other financial assets 110,288 110,895 113,210 115,113 Loans and advances 1,185,382 1,380,566 1,185,042 1,378,211 Other receivables 214 242 214 242 Total financial assets 1,532,974 1,702,027 1,535,556 1,703,890 Financial liabilities Deposits 1,096,756 1,269,584 1,097,091 1,270,643 Accrued commission payable 97 94 97 94 Other financial liabilities 321,695 321,438 321,695 321,438 Creditors and other payables 5,710 5,013 5,710 5,013 Total financial liabilities 1,424,258 1,596,129 1,424,593 1,597,188 B. FAIR VALUE MEASUREMENT Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Wherever possible, fair values are calculated by the Group using unadjusted quoted market prices in active markets for identical instruments. A quoted price in an active market provides the most reliable evidence of fair value. For all other financial instruments, the fair value is determined by using other valuation techniques. BNK Banking Corporation Limited Interim Financial Report 31 December 2024 Page 19 of 23 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS In thousands of AUD 24. FINANCIAL INSTRUMENTS (CONT’D) B. FAIR VALUE MEASUREMENT (Cont’d) As part of the fair value measurement, the Group classifies its assets and liabilities according to a hierarchy that reflects the observability of significant market inputs. The three levels of the hierarchy are described below: • Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities. • Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable in an active market. • Level 3 — Valuation techniques for which significant inputs to the fair value measurement are not based on observable market data. There were no reclassifications between the levels during the interim reporting period or the previous reporting period. 25. EARNINGS PER SHARE The following reflects the net income and share information used in the calculation of basic and diluted earnings per share: 31 Dec 2024 $ 31 Dec 2023 $ Profit/(Loss) for the period ($’000s) 320 (1,816) Number Number Weighted average number of ordinary shares used in the calculation of basic earnings per share: 118,719,405 118,719,405 Weighted average number of ordinary shares used in the calculation of diluted earnings per share 118,785,030 118,785,030 Basic earnings per share (cents) 0.27 (1.53) Diluted earnings per share (cents) 0.27 (1.53) 26. RELATED PARTIES During the reporting period the Group sub-leased office space from AURA Group Services, a related entity of Mr Calvin Ng (Director). Rental expense paid during the reporting period totaled $43,021 (H1 Dec 2023: $47,676). There was no balance payable at 31 December 2024 (2023: Nil). The group also paid Commissions to FirstMac Limited for commissions on deposits raised through BNK (David Gration as BNK Director). During H1 FY25 BNK paid $66,368 and $125,747 in H1 FY24 (Dec 2023). This arrangement transitioned to an in house BNK solution effective 1 November 2024. The group received trail commission income from two wholesale related parties where BNK Directors hold key positions. Resimac Limited (Warren McLeland as BNK Director) and FirstMac Services Pty Ltd (David Gration as BNK Director), contributed $192,273 and $25,123 respectively of trail income commissions to the Group during H1 FY25 (incl GST). (H1 FY24 $242,017 and $44,932 respectively). All related party transactions are made on terms equivalent to an arm’s length transaction. BNK Banking Corporation Limited Interim Financial Report 31 December 2024 Page 20 of 23 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS In thousands of AUD 27. EVENTS SUBSEQUENT TO BALANCE DATE On 21/02/2025, Bendigo Bank reached an agreement with the Bullion Trust to purchase $220.6m of Residential Home Loans. The transaction will generate a net profit of approximately $2m, subject to finalisation of treatment, to be reflected in H2 FY25. On the effective date of settlement, the loans being sold will cease to be held on the balance sheet but will continue to be serviced by the Group, for which the Group will receive Servicing Fee income. In the opinion of the Directors, there have been no other matters arising in the period between the end of the reporting period and the date of this report that are likely to significantly affect the operations of the Group. BNK Banking Corporation Limited Interim Financial Report 31 December 2024 Page 21 of 23 DIRECTORS’ DECLARATION In accordance with a resolution of directors of BNK Banking Corporation Limited, I state that: In the opinion of the directors: (a) The consolidated financial statements and notes set out on pages 7 to 20 of BNK Banking Corporation Limited for the half-year ended 31 December 2024 are in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the Group’s financial position as at 31 December 2024 and of its performance for the six month period ended on that date; and (ii) complying with Accounting Standard AASB 134 'Interim Financial Reporting' the Corporations Regulations 2001 and other mandatory professional reporting requirements; and (b) There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. Signed in accordance with a resolution of the directors: Jon Denovan Chairman and Non-executive Director Dated this 26th day of February 2025 Sydney Grant Thornton Audit Pty Ltd Level 26 Grosvenor Place 225 George Street Sydney NSW 2000 Locked Bag Q800 Queen Victoria Building NSW 1230 T +61 2 8297 2400 #13079345v3 www.grantthornton.com.au ACN-130 913 594 Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Limited ABN 41 127 556 389 ACN 127 556 389. ‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Limited is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 ACN 127 556 389 and its Australian subsidiaries and related entities. Liability limited by a scheme approved under Professional Standards Legislation. Independent Auditor’s Review Report To the Shareholders of BNK Banking Corporation Limited Report on the interim financial report Conclusion We have reviewed the accompanying interim financial report of BNK Banking Corporation Limited (the Company) and its subsidiaries (the Group), which comprises the condensed consolidated statement of financial position as at 31 December 2024, and the condensed consolidated statement of profit or loss and other comprehensive income, condensed consolidated statement of changes in equity and condensed consolidated statement of cash flows for the half year ended on that date, including material accounting policy information, other selected explanatory notes, and the directors’ declaration. Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the accompanying interim financial report of BNK Banking Corporation Limited does not comply with the Corporations Act 2001 including: a giving a true and fair view of the Group’s financial position as at 31 December 2024 and of its performance for the half year ended on that date; and b complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. Basis for Conclusion We conducted our review in accordance with ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity. Our responsibilities are further described in the Auditor’s Responsibilities for the Review of the Financial Report section of our report. We are independent of the Company in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the annual financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. #13079345v3 Grant Thornton Australia Limited Directors’ responsibility for the interim financial report The Directors of the Company are responsible for the preparation of the interim financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the Directors determine is necessary to enable the preparation of the interim financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. Auditor’s responsibility for the review of the interim financial report Our responsibility is to express a conclusion on the interim financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the interim financial report is not in accordance with the Corporations Act 2001 including giving a true and fair view of the Group’s financial position as at 31 December 2024 and its performance for the half-year ended on that date, and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. A review of an interim financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Grant Thornton Audit Pty Ltd Chartered Accountants C L Scott Partner – Audit & Assurance Sydney, 26 February 2025

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