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MyState loan book lifts $1bn

The non-major bank has announced “significant” home loan growth over the financial year 2022, up more than $1 billion.

The ASX-listed non-major bank MyState Limited (ASX:MYS) reported a 25 per cent lift to its home loan book, taking it to $6.9 billion in FY22, up from $5.5 billion the year before.

The home loan book (excluding acquisition costs) grew $1.3 billion up 24 per cent during the financial year.

This increase was “well above” system (8.2 per cent), which managing director and chief executive Brett Morgan said showed the bank’s strategy to accelerate growth in a competitive banking landscape was working.

The bank lending growth was driven by lower-risk owner-occupied principal and interest (P&I) lending, with a “significant momentum” in home loan applications going into FY23 with applications in Q4 FY22 up 63 per cent.

Its home loan book now comprises 98 per cent of lending assets, primarily driven by this growth in home loan settlements, which lifted 93 per cent to $3 billion.

Fixed-rate lending fell in the second half of the year, reflective of the increasing cash rate environment, from 34 per cent in the first half of 2022 to 15 per cent in the second half, in proportion to its total loan book.

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Overall, the group recorded a net profit (after tax) of $32 million, its second highest on record after last year’s $36.3 million profit.

The bank’s focus on low-risk, owner-occupied lending underpins the quality of the bank’s balance sheet.

The bank saw an uptick in over 90 per cent loan-to-value ratio (LVR) loans, which it reflected was due to support of the First Home Loan Deposit Scheme (FHLDS), making up 13.8 per cent of its home loan book.

However, it remains focused on low-risk, owner-occupied lending with an LVR of less than 80 per cent.

Despite several lenders offering COVID-19 assistance during the pandemic, MyState reported there was no pandemic-related assistance taken up, with home loan arrears down 14 bps to 0.41 per cent.

While arrears are lower than 12 months ago, the flow-on effect of an increasing cash rate environment may not become visible for months.

The bank, which delivers home lending, savings and transactional banking solutions through digital and
third-party channels, was focused on growing its share in “deposits, lending and funds” moving forward.

“MyState remains focused on increasing scale and benefitting from operating leverage, whilst optimising our digital and AI capabilities, which enables our team to deliver simpler products and experiences for our customers, CEO Mr Morgan said.

He said the bank’s investment in marketing and digital capabilities puts it in a solid position to increase market share in a competitive banking landscape.

[Related: MyState expands broker distribution team]

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