Powered by MOMENTUM MEDIA
subscribe to our newsletter

MyState profit dragged down by funding costs

The non-major bank has reported a 9 per cent fall in its underlying net profit, despite above system home lending growth.

MyState Bank has released its 2019 half-year (HY19) financial results, reporting a 9 per cent decline in its net profit after tax (NPAT) to $14.4 million, down from $15.8 million in HY18, despite above system home lending growth of 10.3 per cent ($4.6 billion) in HY19.

Managing director and CEO of MyState Melos Sulicich attributed the weakened performance to higher funding costs and the lender’s investment in a new platform designed to facilitate the growth of its funds management business. 

MyState was recently forced to reprice its mortgage book in response to funding cost pressure, with the lender announcing out-of-cycle mortgage rate hikes of up to 16 basis points.

The continued cost pressures were evidenced by a decline in the bank’s net interest margin, which dropped to 1.82 per cent in HY19.

Advertisement
Advertisement

However, Mr Sulicich said that the bank plans to build long-term growth in the profitability of the business by “gaining market share in both banking and mortgage funds management”.  

“To deliver on this objective, we have undertaken a number of key initiatives to support business activity, which we expect will provide a foundation for profit growth in FY20 and beyond. 

“Pleasingly, we continue to see ongoing growth in new customers, which provides further confidence in our value proposition.”

MyState has also reported deposit growth of 10.6 per cent to $3.4 billion, which, according to Mr Sulicich, was driven by the bank’s digital proposition.

“Our strategy of digitising services is benefiting customers, and we now offer a complete digital product suite, having recently introduced online origination for home loans, online deposit products and new payment technologies,” he said.

PROMOTED CONTENT


However, the MyState CEO said that he expects external market challenges to continue weighing on the bank’s overall performance.

“Given the external environment, our recent repricing initiative, volume and cost momentum, we expect the second half of FY19 to be broadly in line with the second half of FY18, and therefore the full year net profit after tax is expected to be around $30 million or 3 to 5 per cent below FY18,” Mr Sulicich concluded.

[Related: ANZ CEO rues ‘overly conservative’ lending policy]

MyState profit dragged down by funding costs
Melos Sulicich
mortgagebusiness

Are you a new-to-industry broker in the process of growing your business? Then there’s some great news: The Adviser’s New Broker Academy is back in 2021 and will provide you with essential insights into cutting-edge tools, strategies and processes to fast-track to success. Don’t miss your chance to attend. To secure your FREE place, visit newbroker.com.au now!

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.

Latest News

True Savings, a new online brokerage headed by former CBA executive Pete Steel, has entered the Australian mortgage market. ...

Pre-registrations have opened for Citi’s upcoming buy now, pay later offering, Spot., which will launch in October. ...

New Zealand’s central bank is primed to further tighten mortgage lending standards, following concerns with a rise in high-LVR and high-DT...

Join Australia's most informed brokers

Do you know which lenders are providing brokers and their customers with the best service?

Use this monthly data to make informed decisions about which lenders to use. Simply contribute to the survey and we'll send you the results directly to your inbox - completely free!

How long do you think it should take to discharge a mortgage?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.