IMB Bank - 31 December 2020 Interim Financial Results Announcement

IMB Bank today announced its interim financial results for the period ended 31 December 2020. 

Chief Executive, Robert Ryan said “Together with the entire industry, IMB Bank has been working hard to support our members and the broader community through the challenging conditions brought on by the global pandemic.”

“We are encouraged by the strength of the bank’s performance over the first half, with key financial health metrics being maintained, including some recovery in the level of net profit after tax against the prior corresponding period.”'

Overview of interim results to 31 December 2020¹

• Net profit after tax: $16.3 million, up 21 percent, is reflective of the focus on maintaining financial strength metrics
• Net interest margin: maintained broadly at 2.11 percent as a result of balancing outcomes for lending and depositor members
• Capital Adequacy at 16.5% and High Quality Liquid Assets at 20%, sit comfortably above required regulatory ratios
• Efficiency ratio: Improvement to 70.2% against 72.8%, influenced by close management of costs during the current period
• Total assets have grown to $7 billion.

Mr Ryan said “A minor reduction in the level of COVID related loan provisioning to $3.8m down from $4.0m at 30 June 2020 was made as a result of portfolio movements. We remain cautious as to the extent of the credit losses that may eventuate in connection with borrowers impacted by COVID-19.”

“IMB Bank has been side by side with our borrowers over recent months, providing tailored loan assistance solutions to enable them to work through the difficult conditions. It is very pleasing that at 31 December, the majority of affected borrowers had returned to normal repayment arrangements with only 0.09% in receipt of hardship assistance - a significant improvement from 4.8% at the peak of the pandemic.”

Mr Ryan confirmed IMB Bank’s underlying credit quality is strong and that a release in the level of loan provision is expected to be possible at 30 June 2021 should economic conditions continue to improve.  Capital adequacy (16.5%) and liquidity (20%) ratios have also increased, with the bank maintaining appropriate buffers to deal with the uncertain economic environment.

“Total assets grew to $7 billion, and new lending activity is building from the very subdued levels experienced earlier in calendar year 2020. Despite the low rate and highly competitive market conditions, margin has been well managed at an average of 2.11.”

“The strong financial position from which we went into the pandemic has enabled the organisation to rise to the unique challenges of the operating environment at the same time as pushing forward on our digital strategies so that IMB continues to grow and becomes a more resilient bank.”

“Work on the systems integration following our merger with Hunter United Employees’ Credit Union will be complete in the coming months and we have continued work on the first phase of our lending transformation project. We also delivered an uplift in our cyber security infrastructure and fraud systems and will relocate to our new head office premises in February. 

“The first half has been both a demanding and productive period for our organisation and we are very proud of the effort and commitment of the entire workforce. Whether it be in the form of unwavering frontline member support or driving large scale transformational change, our people are each making a positive difference to the banking experience of our members and are contributing to the future success of IMB Bank.   

Dividends

Having considered a range of factors such as the current prudential guidance on capital distributions, the economic outlook, the interim profit result and the varying interests of all IMB Bank members, the Board has declared an interim dividend of nine (9.0) cents per share, fully franked. The effective dividend payout ratio is 71.1%of shareholders’ interest in contributed funding.

The dividend will be paid after the close of trading on 4 March 2021 to IMB Bank shareholders registered at that date.

On the basis that it would not be the most effective use of capital in the current environment, as previously announced, there are no plans for a buyback of IMB ordinary shares to be undertaken in the 2020-2021 financial year.

Outlook

Mr Ryan said “The Board and management are focused on maintaining the strong financial and prudent risk position which has been critical to IMB Bank’s ability to withstand the impacts of the pandemic. We are encouraged by the level of deposit growth and new lending activity and are embracing the opportunity to accelerate digital transformation initiatives that make IMB Bank a stronger organisation.“

“While the ongoing effects of COVID-19 are difficult to determine, we will continue to use our strong financial position to support our members and their communities in they way need us now, while looking to the future and delivering on our vision for the long-term benefit of our members.”

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

Date: 29 January 2021