IMB Bank - half year result to 31 December 2019

January 30, 2020

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IMB Bank today announced a net profit after tax result of $13.2 million for the six months to 31 December 2019. The result is lower than the previous corresponding period but in line with expectations given the very low rate interest rate environment and IMB’s ongoing investment in key strategic initiatives that will deliver long-term growth and improved member outcomes.

Commenting on the performance for the half year, IMB Bank Chief Executive, Robert Ryan said, “IMB Bank, along with all financial institutions, is operating in challenging market conditions that continue to place pressure on financial outcomes. Although Net Profit After Tax is lower than the previous corresponding period, we are continuing to balance key performance outcomes well -  delivering sound financial results and maintaining required regulatory ratios. We have enabled investment in the establishment of a new head office, a digital lending platform and broad mobile payments capabilities. The proposed merger with Hunter United Employees’ Credit Union is also advancing well through the regulatory approval processes.”

Mr Ryan said “We are continuing to achieve good growth. Our balance sheet grew by 3.6% to $6.3 billion, with record loan approvals of $704 million, an increase of 17.3% on the six months to June 2019 and total deposits increased by $235 million over the last six months to $5.5 billion.”

“Although we have maintained Net Interest Income at similar levels to the period to 30 June 2019, we have seen a contraction in our average net interest margin to 2.08% as we balance the interests of depositor and borrower members.”

As foreshadowed in the 2019 Annual Report, the delivery of strategic growth initiatives, together with the strengthening of IMB Bank’s risk and compliance frameworks as the financial services industry responds to the impacts flowing from the Hayne Royal Commission, has increased costs in the short term and affected profitability for the half year. These initiatives along with the initial impacts of the merger with Hunter United, will continue to place downward pressure on IMB Bank’s financial performance over the course of 2020.

IMB Chairman, Noel Cornish said “As IMB prepares to celebrate our 140th Anniversary in April of this year, we are reflecting on the contribution that IMB has made, and continues to make, to the lives of our members and the communities in which we operate.

“We have been deeply saddened by the devastating effects of the recent bushfires across Australia. Our NSW south coast and southern highlands members and employees have been significantly impacted, with some experiencing total loss of homes and businesses. We are working tirelessly to provide support to our members through financial hardship assistance, emergency funding and the distribution of grants to grass roots organisations that are contributing to the rebuilding and renewal of these communities.”  

While a preliminary allowance has been made in the half year results, the financial impact to IMB Bank and its members arising in connection with the bushfires continues to be monitored and will have emerged more clearly by 30 June 2020.

The IMB Board has declared an interim dividend of eight (8.0) cents per share, fully franked. The effective dividend payout ratio is 74.61% of shareholders’ interest in contributed funding. The dividend will be paid after the close of trading on 27th February, 2020 to shareholders registered at that date.

30 January 2020

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