National push turns lucrative for Teachers Mutual
Teachers Mutual Bank says it is on track to post another year of double-digit loan growth, despite slowing demand for housing credit across Australia.Chief executive Steve James said the bank had made a strong start to the current financial year by accelerating its strategic push outside of its home market of NSW.Most of TMB's new lending is coming through its UniBank brand, which is now the focus of a concerted pitch to prospective borrowers in Victoria and Queensland.The bank is riding high on a national expansion strategy, which delivered a 14.1 per cent rise in net profit to A$31.8 million for the 12 months to the end of June. "About 60 per cent of the home loans we now write are coming from outside NSW - we're starting to see good growth in Queensland and Victoria," James said."In July we were budgeting for loan growth of around six per cent but it now looks like we will be tracking at about ten per cent again."The UniBank brand is growing particularly strongly."As previously reported in Banking Day, Teachers Mutual will accelerate its national growth agenda early next year with the launch of a new business trading as Health Professionals Bank.The new banking brand will initially be marketed to nurses and midwives across the country in a move that could potentially undermine traditional banking providers to health professionals, such as P&N Bank in WA and QBank in Queensland.APRA's tightening of lending standards and the property market correction have not stymied TMB's growth trajectory.In 2018, the bank expanded its home loan book by 10.5 per cent to $5.4 billion, with UniBank accounting for most of the growth.In the last three years UniBank has grown its loan asset base fivefold to more than $753 million.UniBank's target market - tertiary academics and administrators - is one of the most prized in Australian banking because of the above average incomes of borrowers.TMB's main competitors in this market segment are Bank Australia and the four major banks.Cost control looms as one of the big challenges of marketing four brands to a national market.Expense growth was contained last year, with non-interest costs rising by around six per cent.James is expecting to make a big dint in operating costs over the next 12 months with the progressive roll out of robotics to replace manual systems in the bank's back office.TMB is targeting annual cost savings of up to $6 million from automating back office functions after a successful trial using artificial intelligence to manage dishonoured transactions over the last six months."We're making a heavy investment in robotics," he said."We're targeting cost savings of between $5 million to $6 million and we think we will start to see some of the benefits flow through in 12 months' time.James said business growth meant that staff previously employed in back office roles were being redeployed to customer-facing and digital development jobs.