Bank takes 15% profit hit over cheaper rates

The chairman of a mutual bank says the group’s decision not to hike home loan rates out of cycle in 2015 has led to a significant fall in profit.

Greater Bank this week posted an annual profit of $29.51 million, down 15.6 per cent from $34.95 million in 2015.

The mutual lender, which holds $5.72 billion in total assets, said its focus had been on innovation and culture to benefit customers rather than profit.

Speaking at the group’s AGM in Newcastle this week, chairman Wayne Russell said the lower profit is due to an investment in people, capability and systems to ensure Greater Bank is able to meet customers' changing needs.

“It is also lower because in 2015, unlike many other lenders, Greater Bank chose not to conduct out of RBA cycle increases in home loan interest rates,” Mr Russell said.

“As we are a customer-owned bank, profit is not as important as meeting customer needs and making our organisation sustainable and nimble for the future.”

Mr Russell said lending growth was particularly pleasing given modest growth over the past three years. Net loan approvals were up 23 per cent to $1.02 billion on last year.

He noted that CEO Scott Morgan and his team had worked with the board on a new Blueprint for Change strategy and ensuring the business culture is right for ongoing change and innovation.

Some of the bank’s key achievements over the year were enhancements to core and mobile banking and the roll out of a new branch design.

“I want to pay tribute to our staff for embracing change but maintaining our customer satisfaction levels well above the big banks' at levels as high as 96 per cent,” Mr Russell said.

“An important milestone for the year (May 2016) was the change of name from Greater Building Society to Greater Bank to better reflect what we do for customers.”

Mr Russell said an important pillar of Greater Bank’s strategy and its point of difference to the big banks is support for local communities. The lender allocated $1.2 million to its charitable foundation for allocation to a range of charities and around 200 staff volunteered for those charity partners. This funding is on top of more than $500,000 in direct support by the bank for sporting and community organisations.

“We’re putting in place the strategy and business capability to be able to adapt to whatever changing competitive pressure or customer need is placed before us,” he said.

Greater Bank serves approximately 250,000 customers in Sydney, regional NSW and the Gold Coast.

[Related: Regional bank considers M&A deals in 'challenging' market]

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