ME chief executive Jamie McPhee is confident the industry superannuation fund-owned bank will increase its market share in 2019, saying it is “vitally important to have a bank directly aligned with the interests of customers”.
On Tuesday, ME unveiled 13 per cent growth in underlying earnings, to hit $96.5 million over the 2018 fiscal year. Statutory profit after tax was $89.1 million, up from $61.9 million in 2016-17.
In a statement, McPhee said ME had “performed strongly” despite a softening home loan market, macroprudential restrictions on home lending and rising funding costs.
“We expect to increase market share in FY19, despite challenging conditions, by investing in digital experiences for customers and continuing to develop our suite of retail banking products and services,” he said. “ME will stay true to its core purpose of helping all Australians get ahead, ensuring customers’ interests are not subservient to shareholders’ interests.”
ME plans to expand its credit offering as it migrates to a new credit-card platform, which may help it take market share from competing banks.
“We look forward to the opportunities inherent in open banking and the new payments platform, which will make it easier for customers to switch and will foster greater competition across the market,” McPhee said.
In January, ME selected Florida-based financial technology services company FIS as its new card platform provider. FIS said in a January statement that, under the agreement, it would provide the bank with a “modern platform for credit and debit cards” that includes card creation, processing and billing.
“FIS will work with ME on a suite of new credit-card products and expects to migrate more than 300,000 existing ME customers to the new platform in the latter half of 2018,” FIS stated.
Home loan improvements
McPhee said ME also planned “further improvements” to home loan products and services.
“Our home loan portfolio grew 1.3 times the industry average, due to $6.2 billion in new home loan settlements,” he said. “Customer deposits grew 17 per cent to $14.8 billion while household deposit growth topped the industry, up 27 per cent, or nearly five times the industry average, and provided improvements to the quality of ME’s funding profile while ensuring consistently high rates of return for customers.”
ME was created in 1994 by a group of industry funds to assist Australians with home ownership. Its customer numbers grew 13 per cent, to 474,000, in 2017-18, and have increased at an annual compound growth rate of 11 per cent since June 2014.
The bank launched its first credit card, a low-rate product called Frank, in 2016.