Mutual bank announces merger, FY2016 profit increase

by Phil McCarroll06 Oct 2016
Non-major lender Teachers Mutual Bank (TMB) has announced a pending merger with a regional credit union and small increase in its net profit after tax (NPAT) for the 2015/16 financial year.

TMB yesterday released its FY2016 results which showed a NPAT of $30.2m for the year, an increase of 1.44% from FY2015, with the increase largely driven by an expanded home loan book.

TMB also announced that, pending regulatory approval, the Fire Brigades Employees Credit Union will merge with the mutual lender and be rebranded as Firefighters Mutual Bank from 1 November.

While the increase in TMB’s NPAT for FY2016 may not seem significant, chief executive officer Steven James told Australian Broker that the mutual bank was pleased with the result given how the year unfolded.
“It was well up over our budgeted figure for the year,” James told Australian Broker.

“We thought it was a fantastic result. Given the margin squeeze and economic environment we faced and the fact that we spent a lot of money on technology and had the merger costs with Unibank to factor in, we were very pleased with the result,” he told Australian Broker.

TMB’s mortgage book grew 14.2% over the year to $4.3bn and James said TMB has forecast that to grow another 12% in FY2017, with the bank’s broker channel to play a significant part in that.

“A big chunk of [the FY2016 loan book growth] was due to the broker channel. We’ve got 12 aggregators and more than 2,000 accredited brokers across Australia now and they represented about 25% of our home loan funding last year,” James told Australian Broker.

“We were extremely pleased with the result from the broker channel over the year and we’re hoping to grow our brands through the broker channel. Unibank was a small credit union in Western Australia and is now out nationally through the broker channel and we hope to have Firefighters Mutual Bank in the broker channel by February.”

James added TMB is also working on expanding the size of its broker network and is expected to invest heavily in the channel over the coming 12 months.

James told Australian Broker that the merger with the Fire Brigades Employees Credit Union was a natural fit for TMB and that the bank is more than willing to explore similar opportunities if they present themselves.

“They’re in the essential services sector, just like teachers, so there was a natural affinity there with us.

“They approached us with the offer and we said it was a good fit. They’re strong and want to become national. They’re only a $200m credit union, but they’ve come to $5.5bn mutual bank who is very interested in developing their brand.

"We’re in a very healthy position at the moment and as the industry is consolidating we’re definitely interested in further moves like this with like-minded institutions.”