Newcastle Permanent hit by upgrade costs, changed banking patterns

Newcastle Permanent published its annual results for FY2018/19 yesterday, disclosing net after-tax profits dropping A$8.7 million to $35.1 million - a fall of almost 20 per cent on the FY 2018 result of $43.8 million for the nation's largest building society.

"Our net profit after tax is a reduction on the prior year, reflecting the impact of subdued housing growth, the low interest rate environment, and intense competition, said Jeff Eather, chair of Newcastle Permanent's board of directors.

Eather also acknowledged the impact that increased investments in strategic digital transformation projects were having, along with the impact from one-off costs associated with customer remediation work and restructuring of parts of the business.

Total investment in digital banking over last five years is "more than $55 million", a spokesman said.

One example: Newcastle Permanent's home loan application process is currently being redesigned to become fully digital, including auto-approvals and electronic documentation using digital signatures.

There are also further digital improvements underway to customer communications and engagement using machine learning, website personalisation, the banking app, and expanding on-line account opening to include personal credit products.

The spokesman also referred to improvements made to webchat via chatbots and in-app access, and additional social media: Instagram and Twitter were added to Facebook, YouTube and LinkedIn platforms.

Other numbers the building society was keen to share were that customer deposits increased to $8.2 billion, (up 0.9 per cent for the year), while Newcastle Permanent's home loan portfolio $9.1 billion (up 0.6 per cent for the year).

The financial year marked the turn of a new era for Newcastle Permanent with the departure of former CEO Terry Millett, through to the appointment, and subsequent arrival of new CEO, Bernadette Inglis, who began on 1 July.