Heritage Bank full-year profit falls 3.9%

Heritage Bank has blamed a 3.9 per cent fall in full-year profit to $43.28 million on decreased fees on its members and the increased costs of regulatory compliance and digital features.

Australia's largest customer-owned bank ended the year to June 30 with total assets of $10.09 billion, up 5.9 per cent on the previous year.

Chief executive Peter Lock called it an excellent outcome, with growth across key metrics despite a constrained operating environment.

"They're good strong results, carved out of a challenging operating environment that's not going to get any easier," Mr Lock told AAP.

The bank approved $1.88 billion in loans, up 8.3 per cent, while retail deposits rose 5.5 per cent to $6.94 billion.

The balance of the bank's loan books more than doubled from $188.8 million to $396.15 million, and it also lifted its capital adequacy ratio from 14.11 per cent to 14.42 per cent, as well as its liquidity ratio, from 14.74 to 15.5.

Customer numbers rose by 1.8 per cent.

The bank spent more on complying with regulations in the wake of the financial services royal commission, as well as adding tap-to-pay features such as Google Pay, Samsung Pay and Fitbit Pay, Mr Lock said.

Its income from fees dropped 10.7 per cent to $15.4 million, which Mr Lock said reflects the bank's customer-first approach.

Operating in a ultra-low-interest rate environment was a significant challenge for Heritage, like all banks, Mr Lock said.

While media attention has focused on the cost of borrowing, more of Heritage's clients are depositors, he said, pledging to keep them in mind as the bank responded to further expected cash rate cuts.

"We have to be very mindful of how we are protecting our members' interests," he said.

Mr Lock said the bank was "bucking the trend" by still being committed to physical branches, opening of a new branch in Coomera on the Gold Coast in late 2018 that brought its number of its branches to 60, plus three mini-branches.

Heritage will this year open its first branches outside Queensland.

The first will be in the northwestern Sydney suburb of Castle Hill in late October, while the second will open in Parramatta in mid-December.

Austrlaian Associated PressBack to Breaking News

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