ME Bank today announced an underlying annual profit of $36.9 million, an increase of 51 per cent on the previous Financial Year.
ME Bank CEO, Jamie McPhee, said “the result was on target and a positive outcome in the context of ongoing investments in the Bank’s future and in an environment dominated by low credit growth and strong competition”.
“ME Bank’s underlying profit has continued to grow steadily since 2009 based on customer growth and a shift from an off-balance sheet securitisation model to a more traditional on-balance sheet model that is contributing to increased net interest margin.
“The 2013 Financial Year was one of consolidation in which we were able to demonstrate significant growth and progress towards achieving the goals set out in our three-year business plan.
“Retail deposits grew 58 per cent and home loan settlements grew 17 per cent, while EveryDay Transaction Accounts grew 196 per cent and overall customer numbers grew 12 per cent.
“Our funding mix has also continued to diversify with retail deposit funding increasing from 6 per cent in June 2008 to 20 per cent in June 2013.
“Overall the results confirm our strategic approach, which is to offer an alternative to the major banks based on a genuinely fairer approach, a position derived directly from our industry super fund heritage that sets us apart from other banks.”
Jamie McPhee said ongoing competition combined with low credit growth continued to provide a challenging operating environment, while strategic opportunities included cross-selling between super and banking, and technology.
He said ‘return on equity’ and ‘cost-to-income’ have continued to improve and were currently sitting at 6.3 per cent and 74.7 per cent respectively. Both measures are expected to show significant further improvements over the next three years as the benefits of the Bank’s ongoing investments in its future flow through, including investments in its distribution model and a $60 million technology transformation program.
“ME Bank’s technology transformation program, which is due for completion in 2014, will position ME Bank as one of the most technologically advanced banks in Australia.
“Transformation is about improving ‘customer experience’ and capability. It will better enable ME Bank to challenge the majors through product and service innovation and operational efficiencies,” he said.
ME Bank was established in 1994 as a home loan provider and obtained its full banking licence in 2001. It offered its first transaction account and credit card in 2001 and its first deposit product in 2006.
It received an A3 long-term rating from Moody’s in June 2013 and more recently Standard & Poor's lifted its long-term rating on ME Bank to BBB+, from BBB.