MyState Bank’s investment in its distribution capability paid off during the December half-year when the bank’s mortgage settlement volume rose 117 per cent, compared with previous corresponding period, and its portfolio grew 11.4 per cent to A$6.1 billion since June last year.

Customer deposits grew 12.4 per cent to $4.9 billion over the same period.

A lot of the investment was used to build the Tasmanian-based bank’s brand and its broker distribution footprint on the mainland. More than 18,000 new customers joined the bank in the past 12 months.

MyState chief executive Brett Morgan said the bank maintained its credit quality. Loans in arrears by 30 days or more fell from 55 basis points in the December half 2020 to 47 bps in the latest half.

MyState reported a net profit of $16.6 million for the six months to December – down 2.4 per cent compared with the previous corresponding period.

Net interest income rose 1.1 per cent to $56 million and net banking income rose 3.1 per cent to $63.6 million. With wealth management income of $7.3 million, total operating income rose 3.4 per cent to $70.9 million.

The bottom line was boosted by a $1.1 million release from the expected loss provision but operating expenses, due to its investment program, rose 9.2 per cent to $48.8 million. The cost-to-income ratio increased from 61.5 per cent to 68.8 per cent year-on-year.

Net interest margin declined during the half, falling from 1.89 per cent at the end of June last year to 1.7 per cent at the end of December.

While mortgage lending grew strongly, the “other loans” portfolio (personal, business and overdrafts) declined from $157 million to $119 million year-on-year.

As well as investing in home loan distribution, the bank is upgrading its digital banking services. 

Morgan said this investment was also paying off, with 50 per cent growth in use of the digital channel.

The bank’s common equity tier 1 capital ratio fell from 13.1 per cent in the December half 2020 to 11.6 per cent in the latest half.