Mortgages drive ME’s profit up by 27%

The non-major lender reported an underlying net profit after tax of $60 million for FY2015, a rise of 27 per cent on the previous reporting period.

The group said in a statement yesterday that the increase was driven by growth in home loan settlements, up 22 per cent to $4.6 billion, as well as disciplined management of net interest margin.

Total on and off balance sheet assets grew 7 per cent to $23.3 billion, with total loans on the balance sheet growing 19 per cent year-on-year to $17.8 billion.

The broker sales channel surpassed $2.2 billion, up from $1.2 billion last year, an increase of 83 per cent.

Commenting on the full-year profit result, ME CEO Jamie McPhee said it was a strong performance in the context of the bank completing two major investments during the year – the final deployment of its five-year, $90 million technology transformation program, and a complete refresh of the company’s brand and values.

“We have delivered on our growth objectives and positioned the bank for accelerated future growth, setting us up to deliver long-term strategic and financial value to our industry super fund [ISF] owners and broader partner network,” Mr McPhee said.

ME’s cost-to-income ratio continued to fall, reducing 260 basis points to 68.5 per cent.

Mr McPhee said while there was more work to do, cost-to-income had been on a downward trajectory since June 2009 (when the ratio was 84.5 per cent), and will further improve thanks to productivity gains from new technology.

Customer numbers grew 8 per cent to 338,000, driven by continued home loan growth, new network partnerships that generated large numbers of new customers, and increased uptake of savings products, while customer deposits increased 7 per cent to $8.8 billion.

Mr McPhee said as well as growing ME’s financial value, the bank continued to focus on building its strategic value for shareholders and broader partner network, including creating bespoke products for industry funds.

“We are working on several joint product and service initiatives with our super fund partners, including co-branded credit cards and a super cash management account,” he said.

“We have built on the strong growth already achieved over the last three years and with a new technology platform, and new brand and values, the bank is positioned to further accelerate its growth agenda.”