The Tasmania-based bank has reported a 15.4 per cent decrease in its loan settlements in the first half of the 2020 financial year but expects to see FHB-driven growth in 2H20.
According to the bank’s half-year results, settlements for its loan portfolio dropped by 15.4 per cent, when compared with the previous corresponding period, from $650 million in 1H19 to $550 million in 1H20.
The bank said this easing reflects increased competition following consumer rate reductions, and a focus on managing margins.
Commenting on the results, MyState chief executive Melos Sulicich told The Adviser that the lower level of settlements was a part of a natural cycle in the flow of business.
“We’ve got a really, really strong settlement pipeline now,” Mr Sulicich added.
“And so, loan book growth in this half will be significantly more than the prior half.”
Mr Sulicich highlighted that MyState has been chosen as one of 25 non-major lenders taking part in the government’s First Home Loan Deposit Scheme, and that the bank has been “inundated” with applications from first home buyers.
Mr Sulicich said he expects that the demand generated by the scheme should increase settlements in 2H20.
“The government has set a cap for each of the smaller banks at 1,000, and on current flows, we are on track to reach that 1,000 cap.
“And so we will have a very strong application and settlement flow coming through in the coming period of time, because we’ve been inundated with applications.”
With the sheer demand for loans under the scheme, Mr Sulicich said the turnaround time for applications has risen by two days, to eight days in total.
“But we’re holding pretty well at eight days, and we’re getting through those applications far more quickly than applications that we’ve put through in the past,” he said.
Mr Sulicich noted the contribution of the third-party channel, particularly in relation to the First Home Loan Deposit Scheme.
“The quality of applications in terms of documentation has been the best quality we’ve seen, all coming in from the broker channel,” Mr Sulicich noted.
“It really is outstanding that brokers are really looking after their customers for the first time loan deposit scheme and providing them with great advice and packaging of the loans and sending them to us with everything needed in there first up.”
Overall, the chief executive stated that 80 per cent of MyState loans are welcomed via the broker channel, which has positive onflow into transaction and savings accounts.
“The broker channel has been a strong supporter of MyState over the last few years, so we’re going to continue to work with the broker channel to invest in [it],” he said.
“We’ve got some improved technology solutions that will be rolled out early in the final quarter of this financial year, that are going to make it even easier and better for the brokers to do business with MyState.”
Despite the fall in settlements, the results show a 7.4 per cent increase in the total loan book when compared with 1H19, from $4.7 billion to a total of $5.1 billion
MyState also emphasised its “prudent lending practices” that focus on low-risk lending, which have resulted in 82 per cent of its home loan portfolio with a loan-to-value ratio of less than 80 per cent.
Customer deposits also rose, from $3.4 million to $3.7 million over the same period, a rise of 7 per cent.
Overall, MyState’s net profit after tax hit $15.1 million for 1H20, up 5.4 per cent on 1H19, while total assets rose 1.4 per cent to a total of $5.8 billion.
[Related: MyState CEO to step down]