Merger Costs Weigh on Statutory Profit Despite Stable Underlying Earnings
MyState Limited has reported a stable underlying net profit of $17.5 million for the half-year, maintaining customer growth and a robust capital position as it prepares to merge with Auswide Bank.
- Underlying net profit steady at $17.5 million
- Customer deposits rise 2.2% to $6.1 billion
- Home lending marginally up 0.3% to $8.0 billion
- Total capital ratio strengthens by 60 basis points to 17.0%
- Interim fully franked dividend declared at 10.5 cents per share
Stable Financial Performance Amid Economic Challenges
MyState Limited has delivered a solid financial performance for the first half of the 2025 fiscal year, reporting an underlying net profit after tax of $17.5 million, unchanged from the previous corresponding period. This steady result comes despite a challenging economic environment marked by cost-of-living pressures and cautious consumer sentiment.
The company’s ability to maintain profitability while navigating these headwinds underscores its operational resilience and disciplined approach to balancing growth with margin management.
Customer Growth and Lending Stability
Customer deposits increased by 2.2% to $6.1 billion, reflecting continued confidence in MyState’s offerings. Home lending showed a modest rise of 0.3%, reaching $8.0 billion, indicating a stable lending book. Notably, the bank attracted 7,820 new to bank customers during the period, a positive sign of ongoing market traction.
MyState’s net promoter score (NPS) remains strong at +55, highlighting sustained customer advocacy and satisfaction, which is critical in a competitive banking landscape.
Capital Position and Dividend Policy
The bank’s capital position improved with the total capital ratio rising by 60 basis points to 17.0%, providing a solid buffer for future growth and investment opportunities. This strengthened capital base is particularly important as MyState prepares to merge with Auswide Bank, a strategic move expected to enhance scale and market presence.
In light of these results and merger-related transaction costs, MyState declared a fully franked interim dividend of 10.5 cents per share, payable on 21 March 2025. The dividend payout ratio stands at 77% of pro forma underlying net profit, reflecting a balanced approach to rewarding shareholders while preserving capital for integration and growth.
Looking Ahead to the Merger
The merger with Auswide Bank, effective 19 February 2025, marks a significant milestone for MyState. Management emphasizes the complementary nature of the combined entity and the potential to leverage enhanced scale and capabilities. However, the integration process will require careful execution to realise anticipated synergies and maintain customer service standards.
Investors will be watching closely for updates on the merger’s progress and its impact on financial performance in subsequent reporting periods.
Bottom Line?
MyState’s steady half-year results set a cautious but optimistic stage for its transformative merger with Auswide Bank.
Questions in the middle?
- How will the Auswide merger impact MyState’s future profitability and cost structure?
- What strategies will MyState employ to sustain customer growth amid economic pressures?
- How might integration risks affect the combined entity’s capital and dividend policies?
