Finance Finance News ME banks on more growth after 8 per cent profit

ME banks on more growth after 8 per cent profit

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Industry super fund-owned bank ME has announced an 8 per cent rise in its net profit from the six months to end of December 2015 of $30.2 million, and is expecting the growth trend to continue in the second half of the financial year.

ME chief executive, Jamie McPhee, described the result as strong in challenging conditions, but said more regulatory changes were required in 2016 to further level the playing field between the regional and major banks, including the amount of capital that banks need to hold on their balance sheets.

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Looking ahead, he said the bank’s net interest margin in the next six months will benefit from recent rate increases following regulatory capital changes imposed on the banking sector, although this will be partially offset by the increased cost of funding that is putting current margins under pressure.

ME’s statutory profit after tax, which includes gains on hedging instruments, was $34.5 million (HY15: $39.1 million).

Brand awareness jumped 11 points to 51 per cent since the bank rebranded in July 2015; the highest level the bank has recorded and resulting in customer numbers growing to 347,000.

Net interest income increased 9 per cent to $149.3 million and total operating expenses increased 7 per cent to $133.2 million, the latter reflecting the ongoing investment in technology and the brand.

On the technology front, ME’s new mobile app, which launched in July 2015, has increased mobile-based transactions threefold, and the bank is close to finalising the technical infrastructure to display industry super member balances on its online and mobile banking platforms through a joint partnership with Link Group.

Initiatives with the industry super funds has contributed significantly to customer and home loan growth, including a new program that directly markets exclusive offers to partner members.

Co-branded low-rate credit cards were launched for the first time with AustralianSuper, Hostplus, and Cbus in late 2015, and are being marketed directly through the funds. They have already generated strong growth in applications since launch.

DISCLAIMER: The New Daily is owned by a group of industry super funds.

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