MyState CEO Brett Morgan
MyState Ltd has announced a record after tax profit of A$38.5 million for the year ended June 2023, an increase of $6.3 million (or 20.2 per cent) on the prior corresponding period.
The group has undertaken an ambitious digital services upgrade, looking to expand the reach of its regional bank, while providing trustee and managed fund products in its home market of Tasmania.
The loan book (excluding capitalised acquisition costs) grew by $937 million to reach $7.9 billion at 30 June 2023. Its home loan book grew $962 million (14.1 per cent or 2.9 times system growth) during the period.
However, CFO Gary Dickson told analysts on an earnings call that MyState’s home loan portfolio growth of 43 per cent since June 2021 was slowing markedly.
"Relative to FY22 home loan settlements were down 7.8 per cent in a competitive environment," he said.
Looking ahead, Dickson said the bank expected housing credit growth of 4 per cent, while nevertheless aiming to grow at two times system.
Loans with LVR under 80 per cent make up 75 per cent of MyState's total home loan book. The growth in 85 per cent-plus LVR loans over the past three years was “primarily attributable to our participation in the Federal Government backed first home loan deposit scheme,” Dickson said.
He said these loans "make up 16 per cent of the book and account for 81 per cent of the bank's loan with an LVR of greater than 85 per cent".
MyState’s leadership team has made no secret of its strategy to accelerate growth and create scale by growing market share in deposits, lending and funds under management. The bank reported 33 per cent uplift in new customers in the past 12 months, most of them from the east coast of mainland Australia.
Deposits grew at a slightly slower rate than the loan book, but nevertheless achieved 2.0 times system growth.
Customer deposits increased by 12.3 per cent in the period driven by growth in term deposits, with customers acquired evenly across the branch network, digital, online and third party channels.
Further capital flexibility was provided during the period by the inaugural issue of Additional Tier 1 capital in August 2022 and in December 2022 by MyState's first public RMBS transaction since 2019.
Expect more of these, as Morgan told analysts and investors: "Securitisation has been significantly run down over the last three years as a percentage of total funding. We do have appetite to move that securitisation ratio back to 20, 21 per cent."