bankmecu profit slides on tighter margins
bankmecu suffered a small fall in earnings in the year to June, reflecting a contraction in its net interest margin.The mutual bank reported net profit of A$25.5 million for the 12 months to June - down 3.1 per cent from the 2012/13 net profit of $26.3 million.The bank's net interest margin fell from 2.34 per cent to 2.12 per cent. bankmecu general manager of development, Rowan Dowland, said the bank was full funded by retail deposits and had to balance good rates for both depositors and borrowers.Most of the financial institutions that have had a boost from lower funding costs over the past year have got it from lower wholesale funding costs, while the retail deposit market has remained competitive.Customer deposits grew by 5.2 per cent to $2.7 billion and gross loans grew by 5.1 per cent to $2.4 billion.The bank settled $507.4 million of new loans during the year to June - an increase of 1.7 per cent of the previous year.Dowland said: "It is a challenging market but we have some above-market deposit rates and some very sharp loan rates, including a basic home loan at 4.6 per cent."Bankmecu has 125,000 customers. Dowland said it is attracting new customers at a rate of about 500 a month.Bankmecu has a very active sustainability program, including support for a number of environmental, community and gender equity initiatives. It polls its customer base on what activities it should get involved in, as well as using international benchmarks such as the Global Alliance for Banking on Values."We find that when people are looking for a financial institution they are looking at price plus values," Dowland said.