MyState Ltd will close four branches in central Queensland and two in Tasmania, along with a wealth division office in Tasmania, leaving just seven branches in its network.
MyState chief executive Melos Sulicich said customers’ “digital engagement” was growing strongly and use of branches was falling – trends that have accelerated since the pandemic started.
Sulicich said there were no plans to close more branches.
Branch transactions were down 30 per cent between March and June, and have not recovered fully since then. Sulicich said he does not expect a full recovery of branch transaction activity.
“We are of the view that more and more people will want to do their banking digitally,” he said.
Currently, two-thirds of MyState customers use internet banking. The proportion receiving e-statements has increased from 29 per cent to 46 per cent over the past year.
The number of customers acquired online doubled over the last year.
The Queensland branches are a legacy of MyState’s takeover of The Rock Building Society in 2011. The closures will leave MyState with no branches in the state.
Sulicich said MyState still has a strong presence in Queensland. “We have had a broker strategy for 10 years. Eighty per cent of our loans are sold through brokers,” he said.
MyState reported net profit of A$30.1 million for the 12 months to June – 3 per cent down on the 2018/19 result.
It made an impairment charge of $4.9 million, compared with a recovery of $201,000 the previous year. Half the charge was a COVID-19 overlay and half was an increase in the general reserve.
Without the charge, earnings would have been up 12.9 per cent.
Net banking operating income rose 7.7 per cent to $113.2 million. Income from wealth management activities rose from $15.3 million to $15.6 million. Total operating income was up 7 per cent to $128.9 million.
Expenses were up 3.8 per cent to $80.9 million.
The bank’s loan portfolio grew 4.7 per cent to $5.3 billion. This included 5.1 per cent growth in the mortgage book to $5.1 billion.
At June 30, the bank had provided assistance (including deferrals, loan restructures, switch to interest-only and reduced repayments) covering $556.5 million of mortgages (10.9 per cent of the book), $2.1 million of personal loans, and $15.1 million of commercial loans.
At the three-month check-in 18 per cent of customers on deferral resumed payments or discharged their loans.
Customer deposits grew 7.6 per cent to $4.2 billion. Retail customer deposits were up 15.5 per cent.
The bank’s net interest margin increased from 1.8 per cent in 2018/19 to 1.86 per cent in the year to June. Return on equity fell 52 basis points to 9.2 per cent.
The group did not declare a dividend for the June half and has reset its target dividend payout ratio from 70 to 90 per cent of earnings to 60 to 80 per cent.
The common equity tier 1 capital ratio fell 2 bps to 11.07 per cent.
Sulicich said MyState would continue to investment in digital transformation. Last month it launched a set of personal financial management tools, with features including monthly cash flow and purchase analysis, balance warnings, bill payment alerts and savings “nudges”.
He said the service was fully personalised, using the customer’s own data combined with predictive analytics.