Brokers help lift ME Bank sales

ME Bank is counting on reaching aggressive, but organic, growth targets to lift its return on equity, with recent sales success helping to point the bank in the right direction.

ME Bank put its "after-tax underlying net profit" at A$29.1 million for the six months to December 2014, a rise of 14 per cent on the previous corresponding period.

Statutory net profit for the half year was $40.2 million compared with $25.9 million for the half-year ended December 2013.

ME Bank CEO Jamie McPhee said in a media release that "profit growth was driven by a new record in home loan settlements − up 41 per cent to $2.4 billion at the midpoint of the financial year compared to the previous corresponding period."


McPhee said ME "settled the highest amount of home loans in ME Bank's history" of  $432 million December 2014.

In line with strategy, ME increased sales through brokers, which accounted for $1.1 billion in home loan settlements for the half-year, up from $400 million a year earlier.

The bank is looking to the next stage of its technology upgrade to lift sales on the payment card and transaction account side of its business.

This will be the cornerstone of reaching its target of one million customers, four times the level it was at three years ago.

The bank is also aiming at annual mortgage settlements of $8 billion by 2020.

McPhee put the bank's return on equity at 6.5 per cent last year, rising to 7.1 per cent this year, with a target ROE of ten per cent.

For smaller ADIs in Australia APRA puts sector ROEs at around eight per cent.


"ME Bank together with the regional banks provided a strong submission that resonated with the Australian community; I'm pleased to see the Inquiry has agreed to address the regulatory, capital and funding anomalies that unfairly advantage Australia's major banks," McPhee said.

He identified comprehensive credit reporting as one of the most exciting changes in the industry.

"CCR has the potential to provide massive value for consumers in terms of access to and the cost of credit, and then there's its wider economic value," he said.

"ME Bank expects to be fully participating in CCR this year."