An Australian bank has reported a 13% increase on earnings compared to the last financial year, with its home loan portfolio growing 1.3 times the industry average.
The group has also seen a 17% rise in customer deposits with customer numbers growing 13%.
The industry super fund-owned bank, ME, reported a statutory profit after tax of $89.1million, up from $61.9m in FY17.
Its earnings growth reflected a 7% increase in the bank’s asset portfolio to $28.3 billion and higher net interest margin, up 12 basis points to 1.62% on the previous financial year.
The growth in its home loan portfolio was due to $6.2b in new home loan settlements.
ME’s CEO, Jamie McPhee, said the household deposit growth “topped the industry” by increasing nearly five times the industry average at 27%.
He said this “provided improvements to the quality of ME’s funding profile while ensuring consistently high rates of return for customers”.
McPhee said ME had performed strongly in tough operating conditions, including a softening home loan market, macroprudential restrictions on home lending, rising funding costs, and ongoing regulatory imbalances.
He added, “It is vitally important to have a bank directly aligned with the interests of customers performing strongly, particularly in the current environment.
“ME is owned by industry super funds and is charged with helping all Australians get ahead. Realising that mission is about growing our business and reaching more customers.”
Discussing the numbers he said, “Underlying return on equity of 8.1% was in line with target. The cost-to-income ratio was 64.5%, a slight increase due to accelerated amortisation of legacy software systems.
“We expect to increase market share in FY19 despite challenging conditions by investing in digital experiences for customers and continuing to develop our suite of retail banking products and services.
“One area of focus is credit cards, particularly migrating to a new credit card platform, which will enable ME to expand its suite of credit cards.
“We are also planning further improvements to home loan products and services.
“Increased operational efficiency and profitability will come by continuing to build out the use of robotics.
“ME will stay true to its core purpose of helping all Australians get ahead, ensuring customers’ interests are not subservient to shareholders’ interests.
“Our Net Promoter Score, which tracks customers’ willingness to recommend the bank, averaged 34 during FY18, the third highest across the industry.”
