MyState Bank reveals over 14% home lending growth 

Managing director and chief executive of MyState Bank, Brett Morgan, said the increase in the lending portfolio was due to the bank expanding its strategy with independent brokers.

Speaking to The Adviser he said: “Broker-originated loans are up to 82 per cent of our portfolio, 88 per cent of our flow and we now have 68 per cent of our mortgage book outside of Tasmania, and that is 100 per cent broker-originated flow.

“We have year on year been increasing our lending book and that increase has been driven by our broker relationships.”

MyState Bank’s results revealed the lending portfolio increase took its overall home loan book up to $7.8 billion, with $3.5 billion in applications and $2.6 billion in settlements throughout FY23.

The non-major bank informed that its mortgage growth had been 43 per cent over the past two years with 85 per cent of that growth coming from the broker channel.

The lender also divulged that its broker share of settlements increased by 0.4 percentage points from 87.5 per cent in FY22 to 87.9 per cent in FY23, while the broker share of the portfolio grew from 78.2 per cent in FY22 to 81.6 per cent in FY23.

MyState Bank’s results revealed that it had 25,690 new-to-bank customers over the last financial year, an increase of 33 per cent, which Mr Morgan attributed to its increasing visibility and awareness of the lender’s offerings to brokers and their clients.

He stated: “One of the challenges we have had is that we’re not well known, MyState was not a name well known across the broker industry, there was a small amount of awareness but the industry didn’t know who we were.

“So we invested into a distribution team and small marketing just to promote ourselves, so in terms of what we were missing, our service levels are always pretty good, it was very much about awareness of MyState as an option for brokers.

“So we invested into the distribution market and it has been the key driver of the increase in awareness and increase of use of MyState.”

Mr Morgan said it made “complete sense” for the organisation to align itself with and work closely with brokers because they “deliver a great service”.

“I think the broker industry will only go from strength to strength given the service they’re providing and that customers are seeking to use brokers more and more. So our future is definitely partnering with brokers,” he said.

“We see ourselves becoming more and more embedded into the broker community as we go forward.”

The non-major bank’s results also displayed a slight increase in arrears for both 30-plus days and 90-plus days, rising to 0.81 per cent and 0.34 per cent respectively.

While an increase, they were significantly lower than the Standard and Poor’s Performance Index measurements, attributed to the institution’s focus on low-risk borrowers and a minimal fixed-rate book to be concerned about falling off the cliff.

Mr Morgan said only “about 20 per cent of our book in fixed rate is remaining” and that those customers who had been coming off fixed loans were generally comfortable making those higher repayments, but acknowledged that “it is a more challenging time at higher rates, higher cost of living”.

He said: “We call every customer before they come off their fixed rates just to check in with them to make sure that they are aware of what options they have or refer them back to their broker.

“We believe we are at the top or very close to the top of the rate cycle so we don’t expect any further significant increases in interest rates.

“So hopefully borrowers have a bit of respite and they're able to continue to make their payments. Underpinning borrowers being able to make their repayments employment is still very strong.”

MyState Bank’s results also displayed the boost in its home loan book LVR profile that saw those loans with an LVR of greater than 90 per cent increase from $700 million in FY22 to $900 million in FY23, while loans with an LVR of 80 per cent or lower also grew from $5.3 billion to $5.9 billion across the same period.

Despite the positive growth in customers and home loans, the bank’s net interest margin (NIM) dropped by 4 bps from 1.67 per cent in FY22 to 1.63 per cent in FY23.

Mr Morgan attributed it to the tight competition with MyState Bank seeing itself as a “challenger bank” needing to “price more sharply” that he said meant they were “always going to offer good deals to borrowers and savers”.

[Related: New broker distribution head appointed at MyState Bank]