Following its “very public” support of mortgage brokers throughout the royal commission proceedings, a non-major bank has reiterated its commitment to the channel following the release of its full year results.
ME Bank attributed its FY19 growth to its focus on a core set of simple, transparent and competitively priced retail banking products.
“Our core purpose is to help all Australians get ahead, and a big part of that is getting people into home ownership,” explained ME CEO Jamie McPhee.
With brokers now handling around 60% of all home loans, the channel has become increasingly important to the bank.
“The broker channel is fundamental to us delivering on our core purpose. That’s why we’re focusing on it in the coming year,” said McPhee.
“Our focus is on refining how we’re interacting with the channel. We want to keep hearing from brokers about their biggest pain points when dealing with ME. Our job is to then remove those pain points so they can deliver the best service possible to their customers.”
Over the 12 months to 30 June 2019, ME increased its home loan portfolio by 7.7% to $26.3bn, compared to market growth of just 3% -- a growth rate of 2.5 times system for the year.
“Despite experiencing one of the toughest years in banking, with record low credit growth, record low interest rates, a highly competitive environment, and increased regulation and compliance, ME has grown strongly in both home loans and household deposits and has increased its market share and customer base,” said McPhee, who went on to forecast an increase in market share in FY20.
At the end of June, ME had a 1.53% share of the home loan market, up from 1.46% a year ago.
Customer numbers were up 9% year on year, meaning one in 50 Australians banks with ME.
Statutory net profit after tax (NPAT) of was down $22.0m, down from $89.1m to $67.1m. This result included non-recurring items, IT system remediation and decommissioning costs and impairment losses on ME’s credit card business.
Excluding these items, ME’s underlying NPAT was $99.8m, up 3% on the previous year.
The bank’s Net Interest Margin (NIM) fell three basis points to 1.59% due to “ongoing intense competition” for home loans.
Credit quality remains healthy with 90+ day delinquent home loans remaining in line with the industry at 0.71%. Home loan credit losses remained low at $456,133.