IMB Bank Delivers Strong Results in a Challenging Market

August 27, 2019

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Against a backdrop of significant market challenges and transformation across the financial services industry, IMB Bank today announced results for the FY2019 that reflect the delivery of sustainable financial performance.

Effective management of the impacts of the decreasing rate environment and a subdued housing market delivered a net profit after tax result of $31.7M, just above that of the FY2018 result of $31.6M. The net interest margin is also being maintained, with an average in FY2019 of 2.12% in line with the result for the prior year.

IMB’s Chief Executive, Robert Ryan said “The Financial Services Royal Commission highlighted the need for the industry to rebuild trust in banking relationships, and we are particularly pleased that in this context, IMB Bank’s customer-owned banking model is resonating with new and existing members. In 2018-2019 IMB Bank achieved net member growth, a customer satisfaction of 95%, deposit growth of $273 million and total loans growth of around 8% - which is significantly better than the system growth rate.” Mr Ryan confirmed that maintaining robust credit standards is critically important to IMB Bank and assets remain high quality with low arrears and write off levels.

Total expenses increased 3.3% on the previous year, with new investment primarily supporting the implementation of digital strategies to improve the member experience, keep members’ funds safe when they bank online and to optimise lending operations. While the ratio of non-interest expense to operating income for the Group was slightly higher than the previous year at 66.9%, Mr Ryan confirmed that the efficiency ratio continues to be one of the lowest in the mutual ADI industry.

The Group’s capital adequacy ratio at 30 June was 15.5%, following the completion of a sixth share buyback valued at just over $8 million. The total number of shares bought back under the Buyback program to date is 16 million, representing 40% of the issued share capital at the commencement of the Buyback program. The construction of the new head office in Burelli Street, Wollongong is also progressing well with the project expected to be completed in late 2020.

IMB Chairman Noel Cornish said “The Board is very satisfied that solid financial performance is providing a platform for the achievement of our organic and inorganic growth aspirations. In July, it was announced that Hunter United Employee’s Credit Union proposes to merge with IMB Bank and we are delighted that by working together, IMB Bank can expand its operations for the benefit of more customers in the Hunter region.” Subject to the receipt of necessary regulatory approvals, the merger will be effected by way of a transfer of business from Hunter United to IMB Bank in accordance with legislation administered by APRA, indicatively in early 2020.

Mr Cornish confirmed that the Board has declared a final dividend of 10.5 cents per share which will be paid to registered shareholders at the close of trading on 3 September 2019. He noted that the Board considers a range of matters when setting dividends including IMB’s Dividend Guideline, the capital treatment of the ordinary shares, the profit for the financial year, and the capital and strategic needs of the business over the medium term. The Board has previously communicated that the dividend is likely to be within an effective payout ratio range of 65% to 80% based on shareholders’ interest in contributed funding. The full year dividend paid represents a payout ratio of approximately 73.95% of shareholders’ interest in contributed funding.

For more information, contact the Company Secretary on (02) 4298 0211.

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