P&N Group CEO Andrew Hadley
Staff costs climbed by 11 per cent at P&N Bank last year, adding to the bank’s quest for scale.
Perth-based P&N reported an 18 per cent rise in net profit to A$19.5 million, for a return on equity of 3.4 per cent, which is low, even for a mutual bank.
Return on assets was 0.2 per cent.
P&N Group CEO, Andrew Hadley, said P&N had “this year delivered strong financial results and built foundations to enhance its customer experience and operate more sustainably in the future”.
The bank is growing above system, with deposits up by 11 per cent to $6.4 billion, and loans under management up 14 per cent to $6.7 billion.
The pain in the employee cost line may be yielding results in other measures.
“Over the past three years, through the group’s transformation program, we have prioritised replacing outdated legacy systems, processes, and products,” Hadley said.
“Some of the benefits customers have already started to experience include a significant reduction in home loan approval times, with more than half of our simple home loan applications now approved in less than 24 hours.”
But “scale remains imperative”, Hadley and the bank’s chair Steve Targett emphasised in the annual report.
“With the 2023 mergers involving four of the six largest Australian customer-owned banks, P&N Group believe this is an implicit endorsement of its strategy to grow the business naturally and through mergers.
“Our group is currently the seventh largest customer-owned banking group in Australia by asset size.
“With the three largest customer-owned organisations now more than twice our size, we view further consolidation of the industry as inevitable,” said Hadley.
“The retail banking industry is becoming increasingly commoditised, and given the critical investments required in digital banking, cyber security, technology, and regulation to name just a few, achieving scale through mergers can help ensure that we remain competitive and sustainable.”
P&N had $8.2 billion in assets at the end of June 2023, $580 million in member funds and its capital adequacy ratio ended the year at 14.9 per cent.