When expenses pump 10 per cent and fee income takes a tumble, look for funny business in bank financial reporting.
In the case of the newly-headquartered and newly-merged IMB, this is of course found in the misstep of reversing a chunk of the collective provisions taken a year ago, with the absolute worse of the loan deferrals pandemic fresh on the board’s mind.
Over the year to June 2021, IMB Ltd once more became a dividend paying bank; 9 cents each half for 18 cents a year, a trailing yield around four per cent. IMB’s shares trade on a market the bank maintains.
A A$6 million swing in the bad debt line to plus $603,000 lifts the $3.5 million rise to $30.8 million in the net profit for the year.
Profit after tax before the impact of the COVID-19 provision in the current and prior years, was $30.0 million, an increase of 3 per cent, the directors’ report notes.
Operating expenses increased by $10.2 million, or 10.1 per cent, to $110.8 million (2020: $100.6 million). This was due to an increase in personnel and data processing costs, as well as an increase in depreciation and amortisation expense.
Total assets grew by 2.6% to $7.0 billion, with loans under management reaching $5.5 billion (up 1.3 per cent), and retail deposits increasing “by an impressive 14.6 per cent.”
A confident merger between the steadfastly Illawarra institution that is IMB and the rather micro Hunter United Employees’ Credit Union in May 2021 was the highlight of the bank’s year.
“Following completion of the systems and business integration for the merger with Hunter United we are now providing the full merger benefits to the Hunter United division members,” Robert Ryan, the bank’s CEO, wrote in the 2021 annual report.
“We are delighted that all IMB and Hunter United members can access the same products and services at any of IMB Bank’s 52 branches or digital channels.”
Surely that is around 50 too many branches, and it may take IMB to hustle its way into a scale merger with a top 10 mutual bank or two to drag the branch closure program to the priority it either is, or will inevitably become.
“Our merger capability is strong, and we have developed effective strategies for managing the challenges that can arise when bringing unique technology and payments systems together,” the chair Noel Cornish wrote.
“We are open to considering more merger opportunities with other like-minded mutual ADIs that are committed to providing superior personal service, practical banking solutions and strong community support.”