The non-major bank has reported that its statutory profit growth has grown by 58 per cent, driven in part by increased demand from brokers.
ME’s statutory profit after tax for the six months ending on 31 December 2017 was $46.4 million, a 58 per cent increase from the $29.3 million reported a year earlier.
CEO Jamie McPhee attributed the growth to the bank’s “strong brand, competitive pricing, increased demand from brokers and improved customer experiences from new technology.”
ME’s home loan portfolio grew 1.6 times system during the six-month period, with home loan settlements hitting $3.3 billion, an increase of 4 per cent year-on-year.
The bank also saw a “record high” in owner-occupied home loans during the half.
Customer deposits rose by 10 per cent to $13.8 billion, representing 54 per cent of total funding, while total number of customers went up by 13 per cent to 446,235.
The bank said that it expects to see further customer growth in the coming years, particularly highlighting the contracts it has signed with Mastercard and FIS to launch new credit cards.
“Credit quality remains strong, with home loan and personal loan delinquencies (90 days or more) both tracking under industry averages at 0.54 per cent and 1.59 per cent, respectively, while credit card delinquencies (90 days or more) are in line with the industry average at 1.00 per cent,” Mr McPhee said.
Cash and cash equivalents stood at $444.7 million at the end of H1 FY18, compared to the $468.2 million recorded in the same half-year period in 2016.
Despite ME’s positive financial results, Mr McPhee said he expects second-half margins to be impacted with credit growth slowing, curbs on investor and interest-only loans remaining in place, and increased competition in the lower LVR, owner-occupied home loan market.
However, ongoing discussions with regulators on competitive neutrality has generated positive signs, the CEO noted.
“We are pleased by recent statements on capital requirements, open banking, comprehensive credit reporting, and a recent draft report by the Productivity Commission, all of which highlight that more needs to be done to improve competition in the banking industry,” Mr McPhee said.
“Improving competition in banking ultimately benefits consumers – supporting greater choice, encouraging service and product innovation, and creating a stronger and more stable banking system. ME will continue to work toward levelling the playing field.”
Tas Bindi is the features editor for The Adviser magazine. She writes about the mortgage industry, macroeconomics, fintech, financial regulation, and market trends.
Prior to joining Momentum Media, Tas wrote for business and technology titles such as ZDNet, TechRepublic, Startup Daily, and Dynamic Business.
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