TMB CEO Steve James
Teachers Mutual Bank struggled to keep pace with increased competition in the home loan and retail deposit markets in the year to June, with below average growth in its mortgage book and runoff in its deposit book.
And for the second year in a row the bank was hit by system errors.
Member home loans increased by 2.2 per cent to A$8.7 billion, compared with system growth of 4.7 per cent.
Teachers said this outcome was affected by a large number of members switching to basic variable rate home loans and using their offsets to reduce their balances. Without this change in product mix, Teachers estimates that loan balances rose 4.3 per cent, which is still below system growth.
Retail deposit balances fell 2.5 per cent to $8.4 billion.
With rising rates, the bank’s net interest margin increased by 8 basis points to 1.69 per cent and net interest income rose 10.7 per cent to $179.3 million.
However, operating costs grew by 14 per cent. This included an increase in marketing spend as the bank tried to keep pace with highly competitive home loan and deposit markets.
Impairments turned around from a benefit of $205,000 in 2021/22 to a charge of $872,000 in the year to June.
These costs hit the bottom line, with net profit falling 8 per cent to $27.9 million
On the systems side, the bank detected “some errors impacting client accounts that require reimbursements”. It said the majority of the errors were self-identified through compliance programs.
It has set aside $445,000 for ongoing customer remediation. Other remediation matters are yet to be quantified.
This follows the trouble-plagued introduction a new banking app in June last year, which did not work properly for weeks after it went live. TMB chief executive Steve James wrote to customers a month after the launch apologising for “recent mobile banking app, internet banking and payment service outages”.
Membership grew by 1.6 per cent to just over 234,000.