IMB Bank announces 2021-2022 financial results and election of new board chairman

Commenting on IMB Bank’s performance for the 2021-2022 financial year, Chief Executive, Robert Ryan said: “The FY22 results demonstrate the resilience of our sustainable business model. We have performed strongly, with our frontline staff continuing to support our members through the challenges of the pandemic and severe adverse natural events.

“Our ongoing success in helping members to reach their financial objectives, has recently been recognised with IMB being awarded Canstar’s Most Satisfied Customers – Bank and Most Satisfied Customers – Customer Owned Bank awards for 2022 and we are very proud of these accolades.”

According to Canstar, IMB outperformed other Australian banks after considering factors including customer service, ability to meet banking needs, value for money, fees and charges, digital banking capability and interest rates.

“Our strategy of investing in our digital platform to increase competitiveness, simplify our processes and improve the member experience, was further advanced. We launched a new digital mortgage solution, upgraded our mobile banking app, expanded our contact centre capability across customer-facing teams, and delivered data sharing for individual consumers under the open banking regime.”

Financial overview

Mr Ryan said: “IMB Bank reported a net profit after tax of $29.5 million. While this was 4.2% below the $30.8 million net profit in the previous year, it was within expectations as we worked through the challenges of the pandemic, delivered on our strategic initiatives and emerged in a position of strength.

“Loan approvals grew to $1.4 billion, up 5.8 % on $1.3 billion in the previous year. This was a new lending record, demonstrating the benefits of our focus on providing high quality services and the transformation of our products and services to meet our members’ changing expectations.

“We maintained prudent lending practices and despite strong competition and the low interest rate environment, net interest margin was well maintained at 2.09%, slightly below 2.13% at the end of the previous year. Loan arrears continued at industry leading low levels. Having assessed the external environment, IMB released its COVID overlay provision of $2.9 million. Underlying provisioning was increased by $1.6 million in recognition of the potential impacts that may flow from current economic conditions."

“Retail deposits increased to $5.5 billion, up 5.2%, demonstrating strong member demand for our products and services. Our Net Promoter Score (NPS) for new members remains amongst the leading scores for banking organisations. Total assets at 30 June 2022 were $7.1 billion, up 1.6%.

“IMB has a solid balance sheet. Capital adequacy was 14.8% and liquidity was also strong with high quality liquid assets of 16.6%, well above regulatory requirements. We anticipate a small improvement in total regulatory capital when APRA’s new bank capital framework becomes effective on 1 January 2023.

Supporting the community

Mr Ryan said: “As a mutual, IMB is committed to supporting its communities and we worked hard to keep our people and members safe. We remained highly connected with our members through the pandemic and severe weather events, ensuring that front line services were available to our members while ensuring that all health, safety and wellbeing guidelines were met. We also helped personal banking and business banking customers who experienced financial hardship, enabling them to restructure loans, suspend payments and waive fees and costs.”

“Since it started in 1999, the IMB Bank Community Foundation has been a helping hand and funding partner for many community groups, donating over $11 million to more than 800 community groups and projects across NSW, ACT and Melbourne over that time. Some of the projects IMB supported this financial year were the Turbans4Australia community kitchen in Western Sydney, SCARF refugee support in the Illawarra, SAGE sustainable agriculture gardening in southeast NSW, and Survivors R Us mental health training in the Hunter region.”

Strategy and operations

Mr Ryan continued: “Our strategy of broadening our digital capability to respond to consumer behaviour changes and expand our reach, made significant progress. We are excited by the opportunities we have created with the release of our digital mortgage. Borrowers now have the ability to apply, and receive a fast automated conditional approval for an IMB home loan, online.

“Our recently upgraded mobile app provides elevated levels of accessibility and fast and easy-to-use payment systems. We continue to invest in our cyber security strategy to protect our information assets and give members the comfort they need when they use digital banking tools. Acknowledging the increasing frequency and sophistication of scams, we have also bolstered our education of members to help them identify indicators of fraud and protect their funds.”

“IMB’s systems now support the Australian government’s Consumer Data Right initiative with individual members having the choice share their banking data with accredited third-party recipients in a simple and secure manner.”

“In July 2022, IMB was invited onto the National Housing Finance and Investment Corporation’s panel of lenders, allowing participation in the Government’s Home Guarantees Scheme. This provides eligible Australians, including first home buyers and single parents, with support to buy a home through a lower deposit requirement without lender’s mortgage insurance. Our involvement with the Scheme aligns strongly with our purpose as IMB has been helping people achieve their goals of home ownership for over 140 years.”

“We are ensuring we maintain strong capital levels in preparation for the change in the regulatory capital treatment of IMB ordinary shares which occurs on 1 January 2025. As previously advised to members, because of amendments to the prudential standards relating to capital adequacy, IMB’s ordinary shares will not be included in IMB’s regulatory capital ratios from that date.  The removal of ordinary shares through a series of buybacks over time has been an important part of the Board’s longer-term capital management strategy, however, based oncurrent capital levels we are not planning for the completion of further ordinary share buybacks.”

“As part of a robust capital management strategy, the Board continues to consider options that will  optimise IMB’s capital base including how other forms of prudentially-recognised capital such as mutual equity instruments, preference shares, subordinated debt and capital notes may play a role in future capital management strategies.”

Board Renewal

“As part of the Board’s planned renewal, we wish to inform IMB Bank’s members that after twelve years as a Director, and six years as Chairman, Noel Cornish AM, will retire from the Board just prior to the October 2022 Annual General Meeting.

“On behalf of IMB’s directors, employees and members, I extend our deepest appreciation to Noel for his outstanding contribution to the ongoing achievements of IMB. In his period as Chairman, Noel has ably led the organisation through periods of significant success and challenge, including overseeing our growth through mergers, our response to increased regulatory scrutiny brought to the financial services industry as whole, and of course, the disruption of the global pandemic.  

“We are pleased to announce that Noel will be succeeded as Chair by Catherine Aston who joined the IMB Board in 2016 and is the current Chair of the Risk Committee. Cathy is an outstanding choice to lead the Board, having highly valuable senior executive experience in business and financial management, technology and marketing as well as an extensive career as a non-executive director and Board Chair of regulated entities. Cathy will address members as Chair of IMB at the 25 October 2022 Annual General Meeting.

An external search to fill the impending Board vacancy is well advanced, and further announcements will be made to members as that process progresses.”

Dividends

The Board has declared a final dividend of 9 cents per share, fully franked, which will be paid to registered shareholders at the close of trading on 5 September 2022.  This brings the full year dividend to 17 cents, which based on shareholders’ interest in the contributed funding of IMB, represents a 79.9% payout ratio.

Outlook

Mr Ryan said “IMB has a clear purpose - to build a stronger future for our members and communities. While the operating environment remains challenging, we have emerged from the pandemic as a more modern and agile organisation that is well positioned for the future.”

DATED: 30 August 2022