Elevated turnover in its home loan book and competition have held back the earnings of MyState Limited, as it completes its merger with Auswide Bank.
Pre-provision operating profit of $24.3 million decreased $1.7 million, or 7 per cent, with income growth of $1.2 million offset by an increase in operating expenses of $2.9 million.
Bedding down the merger with Auswide, which closed this week, is now the principal focus for MyState.
The merger roughly increases MyState’s assets by 50 per cent to $15 billion, and diversifies the bank’s lending away from Tasmania.
Sticking with projections made at the time the takeover was announced, The transaction “is expected to yield annual pre-tax cost synergies of $20 million to $25 million” over a three-year period.
Governance and people synergies are to be “largely achieved through removal of duplicated board and executive roles, natural staff turnover, redundancies and duplicate service providers” MyState said yesterday.
On a business as usual basis, MyState has been more than cautious over the last six months, with no growth in its mortgage book of $8 billion.
“Run-off remains a sector-wide challenge” My State said, putting its run-off rate at an “elevated” 27.8 per cent.
Proprietary home loan flows were only 11 per cent in the half, an uptick from 8 per cent in the prior financial year.