Broker strategy pays off for MyState

An investment in increasing its sales through mortgage brokers has paid off for MyState Ltd, which has stemmed a decline in its mortgage portfolio.

MyState's mortgage book increased from A$2.8 billion at the end of June last year to $3 billion at the end of December. Taking personal and commercial loans into account, total loans increase from $3 billion to $3.2 billion over the same period.

The mortgage book grew at 1.6 times the rate of system growth in the December half.

The group settled $404.2 million of loans during the December half, compared with $245.6 million during the previous corresponding period.

MyState chief executive Melos Sulicich said the broker strategy included more competitive pricing and product enhancements, such as removing mortgage insurance cover from loans with loan-to-valuation ratios between 80 per cent and 85 per cent.

Sulicich said: "We have worked on sales management, putting the right business development managers in the right places, and we have worked on services issues, such as approval turnaround times."

MyState made a net profit of $14.86 million for the six months to December, compared with a net profit of $14.85 million for the previous corresponding period.

Return on equity was 10.2 per cent.

The group's improved competitiveness came at a cost: net interest income fell slightly from $42.8 million to $42 million; and the net interest margin fell from 2.45 per cent in the December half in 2013 to 2.36 in the latest half.

The charge for bad and doubtful debts rose from $327,000 in the six months to December 2013 to $618,000 in the latest half.

Last October MyState's Tasmanian banking division, MyState Financial, converted to a bank, changing its name to MyState Bank. The other parts of the business are Tasmanian Perpetual Trustees and The Rock Building Society.