MyState Limited has reported a net profit after tax of A$31.5 million for the 2017/18 year, a 4.6 cent increase over the previous financial year, equating to 10.1 per cent return on average equity (FY17: 10.0 per cent). Chief executive officer Melos Sulicich said that much of the FY18 result could be attributed to simplifying the MyState product range and a continued investment in digital capability, which has brought both productivity benefits and economies of scale.He said MyState had concentrated on owner-occupied lending with loan-to-valuation ratios of less than 80 per cent, targeted to the whole eastern seaboard. The mortgage book has been growing at an annualised rate of nine per cent, while running down its legacy overdraft back book."We continued to build scale while maintaining lean and agile operation. Delinquency ratios are at record lows in a very benign credit environment," Sulicich said.MyState's cost to income ratio dropped 190 bps to 64 per cent, on the back of increased operating revenue (up 1.4 per cent) and a decline in operating costs of 1.5 per cent."We sense the time is right for smaller banks like us, with the capabilities like us, to grow in a digital sense outside our heartlands of Tasmania and central Queensland," he said.Continuing on this theme, Sulicich was keen to make the point that MyState was among the first group of ADIs whose customers were able to access the New Payments Platform service from its go-live date February this year, and its customers were among the system's heaviest users.MyState customers already have access to Apple Pay Google Pay and Samsung Pay, Sulicich said, adding that Fitbit Pay and Garmin Pay were "on the way" this year. He is in no doubt that it was this digital-first strategy that has worked for MyState in FY18."In a highly competitive market MyState has been able to grow its loan book above system to the point where it is now $4.5 billion. This is meant that 55 per cent of lending is now to customers outside Tasmania, a shift from four years ago when two thirds of the book was sourced in Tasmania," he said at a media briefing.This was around 1.2 times system growth for the full year, and a sprint at more than twice system growth over the past six months. Sulicich said he expected the growth rate for the loan book to remain at around 1.5 to 2 times system growth for the coming financial year, as the group continued to focus on becoming "a more sophisticated digital bank". "We will roll out the ability to originate mortgages online from about September or October," he said. The bank will also continue its focus on digital deposit acquisition, after launching online savings and transactions accounts during FY18, including an Everyday and eSaver account. In all, MyState's customer deposits grew to almost $3.3 billion (FY17: $3 billion), or 68 per cent of its funding mix, in FY18 with mortgage backed securitisation (23.8 per cent) and wholesale funding (8.2 per