MyState (MYS) H2 2024 earnings summary

Executive summary

• Announced a proposed merger with Auswide Bank, targeting completion in December 2024, aiming for significant scale, diversification, and shareholder value creation, with expected EPS accretion from FY25 or FY26 post-synergies.

• FY24 net profit after tax was $35.3 million, down 8.3% year-over-year, with lending surpassing $8.0 billion and over 14,000 new customers acquired.

• MyState and Auswide Bank aim 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.

• Successfully launched new internet and mobile banking platforms and improved Trustee Services performance.

Financial highlights

• Net profit after tax for FY24 was AUD 35.3 million, down 8.3% year-over-year; EPS at 32.0c, down 9.7%; NIM at 1.45%, down 18bps; cost-to-income ratio increased to 66.3%.

• Home lending increased by over AUD 160 million to AUD 8 billion; customer deposits fell 4.9% to AUD 5.93 billion; total capital ratio rose to 16.4%.

• Operating costs reduced by 1.6% to AUD 101 million; pre-provision operating profit down 10.9% to AUD 51.4 million.

• 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%; capital adequacy ratio at 14.78%.

• Final dividend declared at AUD 0.115 per share, total FY dividend AUD 0.23 per share (72% payout ratio); Auswide expects a final dividend of 11.0c, payout ratio of 96.3%.

Outlook and guidance

• Merger with Auswide Bank targeted for completion by December 2024, subject to approvals, with $20–25 million in pre-tax cost synergies expected and EPS accretion from FY25 or FY26.

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

• Expense growth expected in the 7%-7.5% range relative to the second half of FY24; FY25 earnings will be impacted by upfront transaction and integration costs.

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

• Auswide anticipates home loan growth exceeding AUD 300 million in FY25 and material uplift in interest revenue as fixed loans reprice.