IMB announces solid core operating result for 2019-2020 in challenging environment

IMB Bank, now in its 140th year of operation, today announced its full year results for the period ended 30 June 2020. 

Chief Executive, Robert Ryan said “The 2019-2020 year has delivered unprecedented challenges for all Australians, including many members who have endured the impacts of the bushfire crisis and now COVID-19.

“IMB Bank’s financial results reflect the impacts of the difficult economic environment, but underlying business performance remains strong, enabling us to continue with our strategic execution at the same time as prioritising the needs of our members who require support through the pandemic.”

Overview of results for 2019-2020¹

• Net profit after tax: $26.3 million, down 17 percent, is reflective of strong underlying business performance but impacted by higher levels of provisioning required as a result of COVID-19
• Net interest margin: 2.09 percent, down 3 basis points (bps) as a result of the low interest rate environment.
• Bad and doubtful debts: $5.2 million, which primarily incorporates a COVID-19 collective provision of $4.0m
• Capital Adequacy at 16% and High Quality Liquid Assets at 18%, sit comfortably above required regulatory ratios, and placing IMB in a position to declare a final dividend
• Total assets growth: 11.7% on the back of strong organic growth and the merger with Hunter United Employees’ Credit Union

COVID-19 Assistance and Credit Quality

Mr Ryan said that “At 30 June 2020, 4.8% of the total loan portfolio was in receipt of financial hardship assistance in the form of loan repayment moratoriums arising from COVID-19. Pleasingly, the number of IMB Bank members needing this type of support is continuously falling, and as at 31 August 2020, the proportion of the portfolio requiring ongoing assistance had reduced to 3.3%.”

“IMB Bank’s historical credit quality is exceptionally strong and we are closely monitoring the loan portfolios. We are conducting proactive borrower reviews and developing tailored solutions with aim of helping members stay in their homes and keeping businesses operational and their workforces employed.”

Business Performance

“IMB Bank’s deposits have continued to increase, with year on year growth of $605 million, or 11.5%, to $5.9 billion. Excluding the effects of the merger with Hunter United Employees’ Credit Union, deposits grew by $289m, or 5.5%.”

Total assets grew by 11.7% to $6.8 billion, supported by strong growth in IMB Bank’s lending book to $5.4 billion. Excluding the effects of the merger, the loan portfolio grew by $191m, or 3.9% which is a good result given the subdued market conditions.”

Strategic Execution

“Despite the challenges of the past year, we have taken the opportunity to accelerate our digital strategies and the automation of systems and processes that improve the experience of our members, and drive greater efficiency and future resilience.

“We have grown the organisation through our merger with Hunter United Employees’ Credit Union and have firmly established our operations in the Hunter region. Our new purpose-built head office in Wollongong is nearing completion and will provide the optimum environment for IMB Bank to thrive in the years ahead. It is very pleasing to have made such significant strategic progress notwithstanding the difficult circumstances being faced.”

Regulatory expectations on capital management and dividends

“After careful consideration, the Board has declared a final dividend of 7.5 cents which will be paid to registered shareholders at the close of trading on 21 September 2020.  This brings the full year dividend to 15.5 cents, which based on shareholders’ interest in the contributed funding of IMB Bank, represents a 72.49% payout ratio.

“In making this decision the Board has had regard to a range of factors including the level of financial performance, prevailing economic uncertainty and the difficulty in forecasting the future impacts of COVID-19 to the organisation. This is a prudent outcome which balances the interests of all members and meets APRA’s expectations that caution is to be exercised in relation to capital distributionsso as to maintain a strong balance sheet and capital buffers.

Looking ahead

 “It is expected that market conditions for 2020-21 will remain challenging and because of this, it is difficult to provide members with guidance on the likely performance outcomes for the year ahead. IMB Bank is committed to supporting our members and communities to recover, maintaining the strength of our core business, and accelerating our digital transformation to deliver operational efficiency and more benefits to our members.

For more information contact the Company Secretary, Lauren Wise at cosec@imb.com.au

_{1. All results relate to the full year ended 30 June 2020, with all comparisons made the against the "prior corresponding period".  The term "prior corresponding period" refers to the full year ended 30 June 2019.}