Profits surge as settlements rise by 36% for non-major

By James Mitchell

14 September 2017

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Industry super fund-owned bank ME has reported a 14 per cent increase in underlying net profit after tax to $85.2 million for the 2017 financial year.

ME CEO Jamie McPhee said that it was another strong performance and continued ME’s strong profit growth over the past five years.

Mr McPhee said that the NPAT growth largely reflected a 12 per cent increase in ME’s home loan portfolio, with net interest margin falling by 5 basis points to 1.50 per cent and total expense growth of 3 per cent.

The non-major lender’s NPAT has grown at an annual compound rate of 28 per cent since 30 June 2012.

Mr McPhee said: “Growth has been the main story for ME in FY17, with home loan settlements up [by] 36 per cent to $6.2 billion, an increase in total assets of 7 per cent to over $26.5 billion, customer deposits up [by] 20 per cent to $12.6 billion, and customer numbers up [by] 15 per cent to 420,000.

“The bank’s performance is particularly positive in light of the external operating environment — softening credit growth, macro-prudential restrictions on home lending, regulatory imbalances that give the major banks a competitive advantage, and a banking industry ratings downgrade by S&P in May.”

ME’s underlying return on equity increased by 10 basis points to 8.3 per cent, continuing the trend towards the medium-term target of 10 per cent, while the cost-to-income ratio reduced further from 65.8 per cent to 63.5 per cent.