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In a year of several strategic milestones, including the announcement of the merger with Sutherland Credit Union Ltd and having completed the successful transition to mutual bank, IMB Bank has reported a consistent financial performance for the year ending June 2016, with a Group Operating profit result of $29.6million after tax.

This result of $29.6 million was in line with the underlying profit result for 2014/2015, or 9.1% below the headline profit result of the prior year, which included a $2.9 million profit on the sale of head office. 

Against the backdrop of the historically low interest rate environment and intense competition for both loans and deposits, IMB’s balance sheet increased by 5.0% on the previous year to $5.2 billion.

IMB Bank Chief Executive, Robert Ryan, confirmed that loan approval levels for the year were $1.011 billion, being 19.1% higher than the previous year.

Mr Ryan said “This level of writings is a significant achievement, being just short of the level of writings that IMB generated when we were active in third party origination. The continued year on year increase in loan writings is a reflection of IMB’s dedicated team of lenders and our competitive loan offering with standard variable interest rates remaining lower than those of the major banks for several years.”

Growth in members’ deposits continued again in 2015/16, with total deposits increasing by $230 million to $4.3 billion. Retail deposits grew by 7% during the year, which was ahead of system growth and reflects IMB’s attractive product suite. IMB’s liquidity ratio remains well in excess of regulatory requirements.

Mr Ryan highlighted that the result for the year was supported by maintenance of the margin, lower levels of bad debts and a modest increase in expenses to allow for investment in a number of initiatives, including IMB’s digital offering.

“Members will have seen significant changes in IMB’s digital landscape during the last 12 months” said Mr Ryan. “Following the launch of our online personal loan application system, we launched our digital onboarding and deposit account opening platform, we redesigned our internet banking to render responsively across desktop, mobile and tablet, and upgraded our Mobile Banking Apps with new features and functionality for Members. Most recently, we started rolling out a new fleet of ATMs which includes a number of Smart ATMs that will accept both cash and cheque deposits.”

IMB Bank Chairman, Michael Cole confirmed that completing a merger with another mutual ADI had been part of the Board’s strategic plans for some time, saying “We are delighted to have completed the merger with Sutherland Credit Union on 1 July 2016, when we welcomed a further 10,000 members in the Sutherland Shire, and added 4 more branches to our network. The combined entity has strengthened the position of IMB as a competitor against the major banks in a key area of strategic focus for IMB, being the Sydney market.”

He added that the Board was satisfied with the sustained financial performance and stability of IMB, including high levels of capital and liquidity, which is important in the increasingly challenging operating environment.

He cautioned however that “following the two most recent RBA reductions to official interest rates, continuing pressures from the competition for loans and deposits, and in the context of expected regulatory capital requirements, the ability to maintain profits at the current levels will be challenging.”

Mr Cole confirmed that the Board had declared a final fully franked final dividend for 2015/16 of 15 cents per share, taking the full year dividend to 25 cents per share. The dividend will be paid on Friday, 2 September 2016 and is payable to shareholders registered at the close of trading on that date.

He advised that as disclosed in the 2015 Annual Report and again at the AGM, the Dividend Guideline set in 2012 has been under review and will be amended in the context of a number of matters including but not limited to:

  • IMB’s financial performance and strategic growth objectives;
  • The current and expected competitive operating environment;
  • Following the introduction of Basel III related prudential standards, APRA’s consideration of the regulatory capital treatment of IMB ordinary shares;
  • Expectations of increased capital requirements under the developing Basel IV regime;
  • Movements in the PwC Securities’ Report on Contributed Funding; and
  • The appropriate approach on which to consider the allocation of contributed funding based on the current structure of IMB, and the effective dividend payout ratio based on shareholders’ interest in contributed funding.

Matters relevant to the Board’s review are nearing completion and it expects to be in a position to communicate a new Dividend Guideline prior to the end of the calendar year and will make announcements as required.  

IMB’s full results will be available on IMB’s website today and IMB’s Annual Report will be issued at the end of September.

 

FURTHER INFORMATION:

Louise Di Francesco

M: 0418 617 869

 

Date: 25 August 2016

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Established in 1880, IMB has been helping people achieve their financial goals for 139 years. IMB offers a full range of banking solutions including home and personal lending, savings and transaction accounts, term deposits, business banking, financial planning and can arrange a wide range of insurance and travel products.

IMB has a growing branch network throughout the Illawarra, Sydney, NSW South Coast, the ACT and Melbourne. We have a lending specialist in every branch and a team of mobile lending specialists who will come to you. IMB members enjoy access to free automated phone and internet banking and a team of professionals who are just a phone call away at our locally based call centre.

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