MyState (MYS) H2 2024 earnings summary

Executive summary

• Announced a proposed merger between MyState and Auswide Bank, targeting completion in December 2024, to create a larger, more diversified banking group with enhanced scale and operational efficiencies.

• Auswide announced the acquisition of Selfco, an SME asset finance lender, and an equity raising to support capital requirements and fund the acquisition.

• FY 2024 was marked by challenging economic conditions, with deliberate cost management and strategic investments in digital platforms and cybersecurity.

Financial highlights

• MyState FY24 net profit after tax was AUD 35.3 million, down 8.3% year-over-year; home lending increased by over AUD 160 million to AUD 8 billion; operating costs reduced by 1.6% to AUD 101 million.

• MyState's cost-to-income ratio increased to 66.3%; NIM at 1.45%, down 18bps; return on equity was 7.7%.

• Auswide FY24 unaudited NPAT was AUD 11.2 million, down 55.2%; NIM at 1.42%, down 46bps; cost-to-income ratio rose to 79.9%.

• MergeCo (pro forma): AUD 12.5 billion gross loans, AUD 9.6 billion deposits, AUD 46.5 million NPAT, NIM at 1.36%, cost-to-income at 69.6%.

• Final dividend declared at AUD 0.115 per share for MyState, total FY dividend AUD 0.23 per share (72% payout ratio); Auswide expects a final dividend of AUD 0.11, payout ratio of 96.3%.

Outlook and guidance

• Projecting system growth of 4% per annum, with expectations to outpace the system at about 5% balance sheet growth.

• MyState expects continued focus on balancing growth and returns, with stable dividends and ongoing investment in digital and risk management.

• Auswide anticipates home loan growth exceeding AUD 300 million in FY25, material uplift in interest revenue as fixed loans reprice, and continued investment in fraud management and cyber resilience.

• Expense growth expected in the 7%-7.5% range relative to the second half of FY 2024.

• Dividend payout policy of 60%-80% expected to be retained post-merger, subject to new board approval.