The Suncorp Group Ltd (ASX: SUN) share price will be on watch on Monday following the release of its quarterly banking update.
How has Suncorp performed in the first quarter?
According to the release, the bank's total lending contracted 0.6% over the September quarter.
Whilst Suncorp achieved growth in commercial lending during the quarter, this was offset by a contraction in its retail and agribusiness portfolios.
Suncorp Bank posted a 0.6% decline in its home lending portfolio. The banking business' chief financial officer, Erin Strang, revealed that this reflected the intense competition in a subdued growth environment. However, she remains optimistic on the future.
She said: "We have focused on driving growth through our direct and broker partner channels, as well as improving our digital settlement capabilities and retention initiatives. As a result of these initiatives we have seen a steady increase in lodgement volumes and improved turnaround times over the quarter, and this will continue to be a focus throughout the year."
Suncorp's portfolio remains within its risk appetite. The portfolio continues to be heavily weighted towards owner-occupiers, with a loan to value ratio of less than 80%.
The bank's credit quality remained strong during the quarter. Housing arrears improved marginally, in line with seasonal conditions.
As mentioned above, Suncorp's business lending growth contracted slightly over the quarter. This was largely due to its agribusiness portfolio.
Erin Strang explained: "Ongoing drought conditions across Queensland and New South Wales contributed to a decrease in funding demand from our farming customers, who have focused on paying down their debts."
"The overall risk profile of our agribusiness portfolio remains favourable, following positive conditions in 2016 and 2017. The outlook for the segment remains dependant on summer and autumn rainfall to support winter cropping," Ms Strang said.
Suncorp finished the period with a Net Stable Funding Ratio of 115.1% and a CET1 ratio of 9.31%. Management expects to meet APRA's "unquestionably strong" benchmarks.
