MyState Limited posted a 58% rise in statutory net profit after tax to $56.2 million for FY26, boosted by integration progress and strong portfolio growth. The company declared a fully franked final dividend of 12.5 cents per share, marking a 3-cent increase for the year.
- Statutory NPAT up 58% to $56.2 million
- Underlying NPAT rises 41% supported by merger synergies
- Loan book grows 7.2% to $14 billion with strong home loan and equipment finance growth
- Run-rate synergies of $11.8 million delivered, targeting $20-$25 million by FY28
- Final dividend increased to 12.5 cents per share, fully franked
Record Profit Boosted by Merger Integration
MyState Limited (ASX:MYS) has reported a striking 58% increase in statutory net profit after tax (NPAT) to $56.2 million for the financial year ended 30 June 2026, a leap largely powered by the full-year integration of Auswide Bank and Selfco. Underlying NPAT rose 41.2% to $58.3 million, reflecting the benefits of scale, improved earnings mix, and realised synergies.
The merger, completed in February 2025, continues to pay dividends beyond the headline numbers. The group has delivered $11.8 million in run-rate synergies to date and remains on track to hit its $20-$25 million target by the end of FY28. This synergy realisation is a key driver behind the 11.7% lift in underlying earnings per share to 34.3 cents.
Loan Book and Deposit Growth Fuel Income
The combined loan book expanded by 7.2% to $14 billion, with a 5.8% increase in the home loan portfolio to $13.6 billion and a remarkable 134% surge in the equipment finance book to $371 million, driven by Selfco’s higher-margin business. Customer deposits grew 4% to $10.6 billion, supported by a diversified funding mix and new digital savings products, including the Hello Saver launched in December 2025.
Net interest margin (NIM) improved by 3 basis points to 1.50%, aided by Reserve Bank of Australia cash rate hikes and the growing contribution from the equipment finance segment. However, the company acknowledges ongoing front-book pricing pressures and competitive market dynamics that may temper future margin expansion.
Credit Quality and Cost Control Maintain Stability
Credit quality remains a cornerstone of MyState’s lending approach, with 90+ day home loan arrears improving from 0.44% to 0.32%, well below industry averages. The impairment expense rose modestly to $4.1 million, reflecting the full-year consolidation of Auswide and Selfco portfolios and a more cautious economic outlook.
Operating expenses increased 33.9% to $170.1 million, mainly due to the enlarged group footprint and inflationary pressures, but on a pro forma basis, expense growth was contained to just 0.8%, thanks to realised synergies and disciplined cost management. The cost-to-income ratio improved by 156 basis points to 66.5%, signalling efficiency gains amid integration.
Integration Investment and Strategic Initiatives
MyState has increased its integration budget from $29 million to $32 million, primarily to fund a modern, AI-enabled core banking platform developed with long-term partner TCS. This investment is expected to underpin future growth and operational efficiency, with a portion capitalised to smooth profit and loss impacts over the three-year integration program.
The transition to a single banking licence on 1 December 2025 has delivered tangible operational, funding, and capital benefits. The company is progressing towards a single loan origination system by the end of 2026 and has commenced a two-year rollout of the single core banking platform.
Dividend Raised as Capital Position Remains Strong
The board declared a fully franked final dividend of 12.5 cents per share, payable on 22 September 2026, lifting the full-year dividend to 24.5 cents, a 3-cent increase over FY25. The dividend payout ratio stands at 72% on an underlying NPAT basis, comfortably within the company’s 60-80% target range. The Dividend Reinvestment Plan (DRP) will operate at a 1.5% discount to the volume-weighted average price during the pricing period.
Capital ratios remain robust, with a Common Equity Tier 1 (CET1) ratio of 11.57% and total capital ratio of 15.83%, despite the redemption of $52 million in Tier 2 subordinated notes during the year. This capital strength supports ongoing investment in growth and integration.
Climate Risk Disclosures and Governance
For the first time, MyState has included mandatory climate-related financial disclosures in line with AASB S2 Climate-related Disclosures. The assessment identified acute physical climate risks and transition risks related to higher insurance premiums, particularly impacting the home loan portfolio. However, no material financial impacts were identified at the reporting date. The company’s governance framework integrates climate-related risk oversight through board committees and executive management.
Executive Remuneration Reflects Performance and Integration Progress
Executive remuneration outcomes for FY26 balanced strong profit growth and integration milestones with market conditions and risk management. Short-term incentives were awarded on a balanced scorecard including financial, customer, people, and risk measures, with the board exercising discretion to moderate outcomes where appropriate. The long-term incentive program remains aligned to total shareholder return and return on equity, with the 2023 performance period concluded and awards made subject to deferral and accountability assessments.
Bottom Line?
MyState’s merger is delivering tangible financial benefits, but integration investments and market pressures will test its ability to sustain momentum.
Questions in the middle?
- How will ongoing market competition and pricing pressures affect MyState’s net interest margin in FY27 and beyond?
- Will the planned AI-enabled core banking platform deliver the anticipated efficiency gains and support for growth?
- How might evolving climate-related risks, especially insurance affordability, influence MyState’s credit risk profile over the medium term?