Merger costs eroded much of the profit of P&N Bank following the merger with Bananacoast Credit Union.
In its first year reporting as a merged entity, P&N delivered a net profit of A$3.2 million, down 69 per cent from $10.3 million in FY2019.
“We were able to maintain net interest margin and adopt a disciplined approach to cost management, including the suspension of management remuneration increases,” CEO Andrew Hadley explained to members in the annual report.
Factors behind the lower profit included:
• pre-merger and integration costs of $3.6 million;
• “Delivery to members of a merger commitment to ongoing fee reductions of $4 million (annualised)”; and
• a $10.7 million credit provision for potential COVID-19 related losses and an additional $3 million provision raised against a legacy property development exposure.
“On a normalised basis, profit after tax would have increased by 28 per cent year-on-year, which would have been 12 per cent below our post-merger budget expectation,” Hadley said.
With the BCU merger, P&N now has more than 156,000 members.
P&N chair Paul Gabb will retire from the bank’s board at the annual meeting. He will be replaced by former BCU chair Steve Targett.