Tassie tiger wants a bite of Big Four

MyState managing director and chief executive, Melos Sulicich has told AB+F that Australians are craving a more diverse banking sector and the time has come for the government to unshackle smaller banks and allow them to compete.

Speaking from Hobart on Friday - in the wake of the lender's announcement of a statutory after-tax profit of $15.2 million for the half - Sulicich said MyState had shrugged off a challenging environment coalescing around regulatory pressures, to see the banking and wealth management group’s loan book grow at a 2.4 times national system growth, surpassing $4 billion for the first time in October 2016.

This means Tassie’s largest financial institution has enjoyed loan book growth at an annualised rate of 14.3 per cent, while earnings per share were steady at 17.3 cents. The Group has rallied around a technologically-driven customer-allied strategy beginning with building a low risk, high-quality loan book.

“Our strategy to become a more customer-focused business, through technology investment and commitment to customer service, has helped us to exceed $4 billion in loans and our momentum is continuing,” he noted.


Ideally placed

Sulicich, said the bank was now ideally placed to capitalise on MyState’s migration to a single core banking platform allowing an “omni-channel, analytical data-driven” change for life as a smaller lender in a challenging banking environment.

"A focused product and pricing strategy and technology-driven innovation have also helped us to increase our loan book at nearly double the national average over the past two years. We are gaining market share, but on an uneven playing field it is an uphill battle," he said.

While the banking division’s net profit edged lower (1.2 per cent to $12.7 million), the result reflected the highly competitive, low-risk owner-occupier / low loan-to-valuation (LVR) lending market targeted by MyState as well as the ‘lower for longer’ interest rate environment.

"We talk regularly with APRA about the disproportionate impact of the risk weight disadvantage, but we just ensure our prudent lending approach is underpinned by sound credit, risk, and capital management processes," he added.

“MyState's business is highly scalable and well positioned to take advantage of our many organic growth opportunities. We remain optimistic about the future."


Level playing field

Sulicich said there is some evidence that market competition for new lending had eased in recent months and higher margins are expected in the second half.

The chief executive called on the government to level the playing field for smaller lenders as capital requirements continue to effectively hinder smaller bank’s ability to innovate on behalf of the growing number of Australian borrowers looking for change.

"We continue to urge the Federal Government to implement the full recommendations of the Murray Report,” Sulicich told AB+F.

“Smaller banks are constrained from competing more vigorously with major banks by mortgage risk weight requirements, which require us to hold significantly more capital, yet our growth is evidence of the competition that we create.

"Reducing capital requirements will increase our ability to offer innovative products that benefit consumers whilst providing equitable returns for our shareholders."

The bank will pay an interim dividend of 14 cents per share, fully franked, on 10 March.

 

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