MyState mortgage book climbs as brokers drive flows

Home-lending activity strengthened in the second half of the financial year, with applications by value rising 16 per cent to $3.4 billion, compared with $2.9 billion in the first half.

Settlements climbed 41 per cent half on half to $2.1 billion in 2H26, from $1.5 billion in the preceding six months, and the result was also above the $1.4 billion recorded in 2H25.

Speaking to The Adviser, MyState CEO and managing director Brett Morgan said the merger’s transition to a single banking licence in December had enabled the lender to promote both brands more effectively and increase broker awareness of its combined offering.

“The key change happened in December last year when the two bank balance sheets combined. We got one banking licence, and what that did was freed us up to be able to really go to market and promote ourselves across both of our brands,” he told The Adviser.

Morgan said the increased market activity had helped drive stronger momentum in the second half.

“We made sure that more and more brokers were aware of what we could offer across both our brands, and with that we saw significantly increased traction and grew well ahead of market in the second half,” he said.

However, he said home-loan application activity had moderated since the federal budget, following the second-half lift.

“We’ve seen a slight dip over the last four months, our home loan applications have been basically flat. We have also seen a 7 per cent decline on the average of our applications over the full year. But over the last couple months, we’ve been flat,” he said.

Broker channel remains central, says MyState

Brokers remained MyState’s dominant mortgage-distribution channel, generating 90 per cent of new flows during FY26, while proprietary channels contributed the remaining 10 per cent.

Broker-originated loans represented 83 per cent of the bank’s mortgage book at 30 June 2026.

Morgan said the broker channel had long underpinned both MyState and Auswide’s growth beyond their traditional physical footprints in Tasmania and Queensland.

“Brokers have been absolutely key to our success for decades. We took the early decisions, both businesses, to partner with brokers, and they’ve been integral and critical to our success,” he said.

He said the lender’s national presence depended heavily on its broker partnerships.

“We don’t have any physical presence in Victoria, New South Wales, Brisbane, we rely on and partner with brokers for our success,” he said.

Morgan added that the lender’s Australian-based operating model and absence of channel conflict formed part of its broker proposition.

“We have Australian-based contact centres, we have entirely Australian-based operations. Brokers can talk to our assessors in Australia, everything we do is here. We don’t have that channel conflict, so it’s important for us that brokers understand that we’re partners,” he said.

Owner-occupiers underpin portfolio

The growth came from a book still weighted towards owner-occupied principal-and-interest lending.

Of the $13.6 billion home-loan portfolio, owner-occupier P&I lending accounted for $10.6 billion, up from $10 billion a year earlier.

Investor P&I balances fell from $2 billion to $1.8 billion, while investor interest-only loans totalled $900 million.

New lending was also predominantly owner-occupied, accounting for 79 per cent of flows, with investors making up 21 per cent.

While P&I remained the largest component of new lending at 83 per cent, its share declined from 91 per cent in the prior corresponding period, with interest-only lending increasing to 17 per cent of new flows, compared with 9 per cent a year earlier.

Variable-rate loans represented 96 per cent of new flows, leaving fixed-rate lending at 4 per cent.

MyState said the figures reflected its ongoing risk settings and borrower mix and added that the outcome reinforced its “continued focus” on low-risk, owner-occupied lending.

Asset quality also improved as the mortgage portfolio expanded with 90-day home-loan arrears declining from 0.44 per cent to 0.32 per cent at 30 June 2026.

The lender said the reduction “demonstrated the resilience of its customers despite ongoing economic uncertainty”.

Queensland represented the largest share of the mortgage book at 31.6 per cent, followed by Victoria at 22.8 per cent, Tasmania at 19.4 per cent, and NSW at 17.4 per cent.

Meanwhile, equipment finance more than doubled over the year, rising 134 per cent to $371 million.

Auswide integration progresses

FY26 was MyState’s first full-year result following the Auswide Bank merger, with the group reporting $11.8 million in run-rate synergies as integration work progressed.

The bank shifted to a single banking licence on 1 December 2025, a change it said delivered “operational, funding and capital benefits”, with MyState also reporting completing 158 integration initiatives.

Morgan said one of the key remaining major projects was the introduction of a unified loan-origination system, designed to remove the current duplication across teams and processes.

“We took a decision to invest in a new loan origination system, it was the first significant decision we took when the two businesses came together,” he said.

“We did that because we knew how important it is that we can grow, serve brokers brilliantly, and be efficient with quick turnaround times.”

He said the system was expected to go live by the end of 2026 or early in the following year.

“Once we bring it all together, once we have our new loan origination system, we’ll have our whole team able to service any loans that a broker submits and provide quicker turnaround times with a better experience,” he said.

Work also remains underway to establish a single core-banking platform and retail-bank brand.

Morgan said MyState had brought its broker teams together and was progressively moving the combined group towards a single-market identity.

“The complete change of name or rebranding will probably take place in 2028. But over the period from now to then, brokers will continue to feel more of the MyState brand in market, and less of the Auswide brand,” he said.

“One example of that is we did withdraw the Auswide brand from the home guarantee scheme, that was about two or three months ago.”

The lender maintained its FY28 run-rate synergy target of between $20 million and $25 million.

MyState lifted estimated integration costs from $29 million to $32 million after deciding to implement an AI-enabled core-banking platform.

Underlying net profit after tax rose 41.2 per cent to $58.3 million, while statutory NPAT increased 58 per cent to $56.2 million.

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