ASX-listed MyState Bank has reported an increase in its loan book and deposits, customer base, and wealth management income in its FY22 results.
The banking and wealth management group reported a significant 25.5% growth in its home loan book for the financial year ended June 30, driven by lower risk owner-occupied principal and interest (P&I) lending. The home loan book now comprises 98% of lending assets, primarily driven by growth in settlements over the prior corresponding period (pcp) of 93% to $3 billion.
MyState also posted continued growth in customer funding, with lower cost “at cal”’ customer deposits up 15.2% on pcp, with above-system customer deposit growth of 25.1%. The group’s Bonus Saver Account, meanwhile, grew by 20% on pcp, driven by MyState’s digital acquisition of new customers.
In FY22, MyState reported an NPAT of $32, down 11.9% on the pcp due to a 12.9% rise in operating costs to support investment in the group’s growth strategy, including a $3.9 million investment in marketing initiatives to support customer acquisition across Tasmania. Investment in marketing and distribution capacity led to an increase in the bank’s cost-to-income ratio to 68.4%.
A final dividend of 11.5 cents per share has been declared for the full year – that’s equivalent to a payout ratio of 79.2%, at the top end of the board’s target range.
MyState recorded a very strong customer net promoter score (NPS), with its internally measured NPS of +43 at the end of June, reflecting a high level of customer advocacy and supporting growth in the bank’s customer base. Meanwhile, its NIM declined during the year – from 1.8.89% in June 2021 to 1.57% in June 2022 – reflecting growth and portfolio mix in the home loan book.
MyState saw growth in its >90% LVR loans, primarily due to the support of the First Home Loan Deposit Scheme (FHLDS), which makes up 13.8% of the book. The forward-looking overlay for credit losses of $0.9 million remains unchanged from Dec. 31, 2021, while home loan arrears levels sat at 0.41%, down 14bps compared to 12 months ago.
As of June 30, the group’s total capital ratio was 12.41% and its common equity tier 1 (CET1) ratio was 10.53%. The $55.5 million capital raised in June 2021 has now been fully deployed to support balance sheet growth, with MyState expecting further capital flexibility to be provided by the proposed first-time issue of additional tier 1 capital and further securitisation. Westpac and Ord Minnett will act as joint lead managers in preparation for a potential additional tier 1 capital issue.
TPT’s funds under management were modestly lower on the pcp, down 3.9% to $1.062 billion. Income from wealth management activities increased by 8.8% compared to the prior period, with managed funds fee income flat and trustee services related income up 29.4%. The commercial lending portfolio grew by 34% over the period to $354 million, reflecting the improved distribution capacity in the group’s home market of Tasmania.
“We remain committed to our 2025 growth strategy, which is focused on growing our share in deposits, lending, and funds under management,” said Brett Morgan, MyState managing director and CEO. “MyState remains focused on increasing scale and benefitting from operating leverage, whilst optimising our digital and AI capabilities, which enables our team to deliver simpler products and experiences for our customers. MyState’s investment in marketing, customer growth, digital capabilities, and simple processes – underpinned by our strong balance sheet – puts us in a solid position to increase market share in a competitive banking landscape.”
