• Underlying NPAT: $7.5 million, in line with the first half of FY24.
• Revenue Growth: Increased by 1.6%.
• Net Interest Margin (NIM): Average NIM of 1.45%, steady on both the prior half and the first half of FY24.
• Total Capital Ratio: Increased by 60 basis points to 17%.
• Home Loan Book: Increased 0.3% to $8 billion.
• Interim Dividend: $0.105 per share, payout ratio of 77% on a MergeCo underlying pro forma basis.
• Wealth Management Income: Rose by 6.1%.
• TPT Wealth Revenue: Increased to $7.2 million.
• Customer Deposits: Improved to 69.7% of the funding mix.
• 90-Day Arrears: 44 basis points, below industry average.

• Warning! GuruFocus has detected 7 Warning Signs with ASX:MYS.

Release Date: February 19, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• MyState Ltd (ASX:MYS) successfully completed its merger with Auswide Bank, increasing its scale, capital base, and geographical footprint.
• The company reported a stable underlying NPAT of $17.5 million, driven by higher net interest and wealth management income.
• MyState Ltd (ASX:MYS) launched a new mobile app and internet banking platform, enhancing the digital experience for customers.
• The company maintained a strong capital position with a total capital ratio of 17%, providing flexibility for future growth initiatives.
• Customer advocacy remains strong with a Net Promoter Score (NPS) of plus 55, indicating high customer satisfaction.

Negative Points

• Operating expenses increased by 3% due to higher personnel costs and strategic investments in technology.
• The company's net interest margin (NIM) remained under pressure due to competitive home loan and deposit markets.
• Return on equity decreased from 7.7% to 7.5%, reflecting challenges in achieving desired profitability levels.
• The interim dividend was reduced to $0.105 per share, which disappointed some long-standing shareholders.
• TPT Wealth's funds under management (FUM) declined, raising concerns about its growth potential within the MyState Ltd (ASX:MYS) umbrella.

Q & A Highlights

Q: How does MyState plan to handle loan growth amidst competitive market conditions? A: Brett Morgan, CEO, stated that MyState aims to grow around the system given current margins. They have improved service levels, which has led to a record number of applications in January without changing prices. The goal is to accelerate growth in the second half to align with market levels.

Q: What impact does the merger with Auswide have on MyState's service levels and growth strategy? A: Brett Morgan explained that the merger has not directly impacted service levels, which have been improved independently. The focus remains on providing high-quality service, which has supported growth in application volumes. The merger offers opportunities for geographic and product expansion.

Q: Can you provide insights into the expected cost synergies from the merger with Auswide? A: Brett Morgan confirmed that they anticipate annual pre-tax cost synergies of $20 million to $25 million over three years. Initial synergies have been realized through a consolidated board and management team, with further savings expected from supply chain consolidation and other areas.

Q: How does MyState view the current economic conditions in its major markets, Queensland and Tasmania? A: Brett Morgan noted that both regions are showing strong borrower resilience, with Queensland offering significant growth opportunities due to its larger population. Tasmania remains a stable market for MyState, and the company is confident in expanding its presence along the Eastern Seaboard.

Q: What is the outlook for MyState's dividend policy following the merger? A: Brett Morgan stated that the dividend policy remains at 60% to 80% of profit. The board will continue to evaluate dividends based on the execution of merger synergies and overall financial performance, aiming to deliver value to shareholders.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.