A nip at the provision line accounts for pretty much all of the profit for deposit-heavy Heritage Bank over the year to June 2021.
Feeling clear - with Delta ablaze in their growth markets of Melbourne and Sydney - to reverse last year's angst-ridden provisions by A$12 million, you have to wonder if Kerry Betros' Heritage has costs issues to reconcile as it negotiates with Adelaide's people's Choice over a merger that plants this pair smack bang on top of Great Southern in the fast-consolidating upper reaches of the mutual banking sector.
A net profit for FY2021 of $44.8 million is a return on assets of 0.7 per cent, better by 10 bps than APRA's average for the sector.
It's the liquidity ratio that tells the story of Heritage Bank this year, and at 26.7 per cent it's so far out of line it's almost funny.
Peter Lock, the CEO calming the Toowoomba headwaters and working through where the Treasury will be, ALCO, credit, risk, the whole mutually-minded nine yards.
Lock will be well aware that Heritage HQ as backwater or substitute for Suva or Manila will be on the minds of many. Probably, head office functions will look 50:50 to begin.
A liquidity ratio in the order of 16 to 17 per cent was the target, Lock told Banking Day, the overshoot intended in looser form to support ambitious and well-chosen new branch openings, such as in Sydney's premier hospital.
The bulging vaults, Lock said, "was driven by member behaviour. We ran a very attractive online deposit rate to support NSW at the end of 2019, then we were hit by Covid.
"Going into lockdown we continued to draw new members and new deposits across the board. We set our views on a very conservative basis," Lock said.
"Coupled with stimulus, there were a lot of people with money in their pockets.
"We haven't been detrimental to members to bring them (liquidity ratios) down."
It's not so easy (but easy, really) to rev up a bank's deposit book. Easier still downhill.
"Traditionally, you slash rates," Lock said, whose board had reasons not to; deposits harvesting prowess plays well at the merger table.
"It was about supporting members but more about getting originations up."
Repayments on mortgages "were also very high", Lock said.