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Teachers Mutual Bank Limited (TMBL) has announced increased profits and delivered a stellar home loan performance in its 2016 annual results. The bank is also set to build scale and strengthen its market position following a vote by Fire Brigades Employees Credit Union members overwhelmingly in favour of a merger.
Teachers Mutual Bank Limited announced a net profit after tax of $30.2 million, a modest increase of 1.44% on 2015. Assets grew by 14% to $5.5 billion.
“Given the challenges of a falling interest rate environment, and the costs of our merger and systems conversion with Unicredit (now UniBank), our modest profit increase is an excellent result,” said Steve James, CEO of Teachers Mutual Bank.
The bank’s investment in multi-brand capability has made it nimble and adaptable—on the day of the UniBank merger in August 2015 the conversion was completed, realising cost efficiencies immediately.
As a result of that merger, TMBL’s member numbers were boosted to 177,357 at year end.
The standout was Teachers Mutual Bank’s housing loan portfolio, which again strongly outperformed system, growing by 14.2% to $4.3 billion.
The bank’s now well-established partnership with home loan brokers contributed to this success, and is growing across the entire country.
“Over the next year we will look to invest further resources to support and deepen our current network of 12 aggregators and 2,000 accredited home loan brokers across Australia,” said Steve James.
The bank maintained a high capital adequacy ratio at 15.85%, and capital reserves increased to $437 million. Net interest margin was 2.37%, a consequence of the tighter interest rate environment.
Retail deposits grew by 13.86%. The top performing product was the relatively recently introduced offset product, whose popularity saw growth of 82.5%.
The bank continues to expand and diversify sources of liquidity and capital via the wholesale market. “We are planning a capital issuance in 2017, subject to market conditions,” said Steve James.
The merger between Teachers Mutual Bank Limited and the NSW-based Fire Brigades Employees’ Credit Union (FBECU) now looks set to go ahead on 1 November. FBECU’s members last week voted strongly in favour (86%) of joining Teachers Mutual Bank.
A name change to Firefighters Mutual Bank (FMB) and a new brand identity (see logo below) will reflect the transition to mutual banking.
The merger is subject to final approvals by the regulators.
Steve James said “FBECU is an ideal value proposition that suits TMBL’s strategic growth strategy. With over 7,400 members and more than $215 million in assets, the new Firefighters Mutual Bank will complement our multi-brand portfolio.”
“We see Firefighters Mutual Bank as a national brand, targeting firefighters and their families across Australia.”
“This merger brings strong synergies and efficiencies which will ultimately bring more benefits to all members.”
“In a consolidating customer owned banking sector, we continue to seek opportunities to partner with like-minded institutions in our ongoing quest to build scale and financial strength,” Steve James said.
The composition of Teachers Mutual Bank’s current Board will be unaffected by the FBECU merger.
The Teachers Mutual Bank Limited Annual Report can be viewed below.
Gillian Tatt, Corporate Affairs Manager, on 02 9735 9825