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Bank CEO laments ‘unfair’ banking landscape

Smaller lenders “remain constrained” by the “unfair playing field” benefitting the larger banks, the CEO of a non-major lender has said.

Following the release of MyState’s full-year 2018 financial results, CEO Melos Sulicich echoed the sentiment of the Productivity Commission (PC) concerning the nature of competition in the banking sector, claiming that larger banks retain an “unfair advantage” from their “too-big-to-fail status”.

Mr Sulicich was satisfied with the bank’s performance over FY18, but said that it was constrained by regulatory conditions, making particular reference to the Australian Prudential Regulation Authority’s macro-prudential measures, which he claimed “undermined” competition.

“Although our result shows that we’re well placed to adapt the business to competitive challenges, we believe we still remain constrained by an unfair playing field that benefits larger banks compared to smaller banks,” the CEO said.

“We welcome the Productivity Commissions finding that larger banks gain an unfair advantage, driven by their too-big-to-fail status.


“Additionally, the Productivity Commission agreed with our concerns that APRA-instigated macro-prudential caps undermined competition by artificially locking in market shares.”

The CEO added: “We believe that the competitive playing field is tilted away from smaller banks who are clearly a home for competition and better customer outcomes.”

Mr Sulicich urged the federal government to review the regulatory environment and “level the playing field”.

“We encourage the federal government to think about how we can reduce the regulatory burden, which falls disproportionately on smaller banks, and to level the playing field so were not hamstrung as is currently the case,” the CEO continued.

MyState’s FY18 results


Moreover, the bank has revealed that, over the 2018 financial year, its home loan portfolio grew by 7 per cent, from $4 billion in FY17 to $4.4 billion. The bank noted that growth in its mortgage settlements were 1.2 times bigger than system.

“Increasingly, we are benefitting from more targeted marketing, supported by our innovation in technology which enables us to increase scale and compete more effectively,” Mr Sulicich said.

“Over the last two years, our loan book has grown at an annualised rate of nearly 9 per cent while maintaining very high-quality lending.”

Mr Sulicich also said that he is anticipating 1.5 to 2 times system growth in FY19.

Despite reporting above-system home lending growth, its total lending flows dropped year-on-year. The overall value of the bank’s home loan settlements were $8 million lower than in the previous corresponding period, with flows falling from an overall value of $1.19 billion in FY17 to $1.1 billion in FY18.

However, on the whole, MyState’s overall funds under management (FUM) increased by 6 per cent to $1.15 billion, with its net profit after tax (NPAT) also rising, increasing by 4.6 per cent to $31.5 million.

“This was a strong result with increased profit, supported by productivity gains and cost management,” the CEO added.

“Revenue increased and underlying costs were steady, delivering positive jaws with the cost-to-income ratio improving by 190 basis points.

“Improving customer services was also recognised by an increase in the group’s net promoter score to +27 at the end of the financial year.”

Mr Sulicich added: “We made significant progress, continuing to build and refine our digital proposition which positions MyState as a modern customer-centric bank.

“We are committed to creating the best customer experience and have improved our online platform, which offers customers personal loan, transaction account and term deposit products.”

[Related: PC calls for reform to ‘inflated’ LMI rates]

Bank CEO laments ‘unfair’ banking landscape
unfair, thumbs down, CEO Melos Sulicich, Product Commission, APRA, Australian Prudential Regulation Authority

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Charbel Kadib

Charbel Kadib is the news editor on the mortgages titles at Momentum Media.

Before joining the team in 2017, Charbel completed internships with public relations agency Fifty Acres, and the Department of Communications and the Arts.

You can email Charbel on: This email address is being protected from spambots. You need JavaScript enabled to view it.

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