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Teachers Mutual Bank annual results 2011/12
Teachers Mutual Bank’s Annual Report released today, shows healthy fundamentals and strong growth in home loans, with a reduction in profit due to maintaining member value.
In a year that saw the former Teachers Credit Union become Teachers Mutual Bank in April 2012, its annual results reveal that profits were a little impacted by official interest rate decreases, and building future capacity.
"2011/12 was an historic year for us, as we became Teachers Mutual Bank at the start of the 4th quarter," said CEO Steve James. "It has been a highly successful transition, and we have continued to outperform our peers in both asset growth and home loans."
Including the transition to Teachers Mutual Bank, operating expenses were kept under control at 69% of income. Net profit after tax for 20011/12 was $23.09 million, at 0.63 % of average assets. Assets were $3.77 billion at year end. Profit was not only sufficient to support current growth but also improved the mutual bank’s capital adequacy ratio to 15.85% in 2011/12.
One of Teachers Mutual Bank’s strengths is the quality of its assets. Delinquency and write-off rates are consistently low compared to industry averages - impairment expenses net of recoveries were just 0.03% of average assets.
Steve James said, “Our profit margin is lower as a result of retaining competitiveness and benefit for members in a low interest rate environment.”
"Additional costs were incurred by: increasing staff costs as we increased staffing to build future capacity for IT, member service and skills in risk, financial management and Treasury; the change to Teachers Mutual Bank; four official interest rate decreases; and maintaining higher levels of liquidity due to the reduction in the government deposit guarantee."
"Liquidity holdings were higher than usual (averaging 18.85%) as a precaution against the reduction in the government deposit guarantee. There was no impact on our liabilities and none was expected, but as a prudent institution we kept our liquidity higher during the lead up and initial post-announcement period."
The mutual bank’s liquidity will return to more usual levels in 2012/13.
Teachers Mutual Bank’s balance sheet growth of 6.97% - compared to 4.98% growth among the other $1billion-plus mutuals - reflected net loan growth of 11.07% and deposit growth of 6.91% as excess liquidity was utilised to fund loans.
Teachers Mutual Bank’s home loan business grew by 11.80% over the 12 months to June 2012, outpacing the market – outstanding balances on residential mortgage loans to households grew by just 6.90% across all lenders for the same period.
"The mutual bank remains in a strong capital position, and continues to deliver excellent member value," said Steve James.
"In 2012/13, we will maintain profitability but true to form as a leading mutual, we will be increasing our spending on risk and financial management, process improvements and infrastructure, while other institutions are cutting back to maximise profit growth," said Steve James
Steve James, CEO, Teachers Mutual Bank on 02 9735 9100
Gillian Tatt, PR and Corporate Affairs Specialist, on 02 9735 9825 or 0448 259 942
View the Teachers Mutual Bank Annual Report.