IMB announces financial results for 2020-2021

IMB Bank today announced its full year results for the period ended 30 June 2021, reporting an uplift across key financial health metrics.  

Chief Executive, Robert Ryan said “It is very satisfying looking back on the 2021 financial year – we took advantage of the opportunities that arose through strengthening economic activity levels, we executed on a number of strategic projects and provided continuous support to our members and communities throughout periods of significant disruption.”

“By delivering these strong results, we are well positioned to do what is needed to be there for our members as we again face into the impacts of one of the most significant pandemics experienced in Australia. 

Overview of results for 2020-2021¹

• Net profit after tax: $30.8 million, up 17 percent, is reflective of good underlying business performance and the release of some provisioning raised in FY2020
• Net interest margin: 2.13 percent, up 4 basis points (bps) on the prior corresponding period, as a result of a higher proportion of retail deposit funding
• Bad and doubtful debts: $0.6 million reversal, which primarily incorporates a COVID-19 collective provision of $2.9m reduced from $4m for the prior corresponding period given economic conditions are more favourable than were expected
• Capital Adequacy: increased to 17.4% from 16% and with High Quality Liquid Assets at 18%both sit comfortably above required regulatory ratios
• Total assets:improved by 2.6% to $7b
• Record loan approvalsof $1.3b were achieved
• Retail deposits:grew by 14.6% to $5.3b

Financial Highlights

“IMB’s financial results for the year are reflective of our continual focus on maintaining the strength and sustainability of the underlying business. The improved profit outcome is as a result of attention given to margin management, maintenance of efficient operations and the reduction in COVID related provisioning levels based off more optimistic economic forecasts.

“Total operating expenses were $110.8 million for the year. While this represents an increase of 10% on the previous year, non-interest expenses as a proportion of average total assets for the Group improved slightly to 1.58%. The increase in expenses reflects the full year impact of the merger with Hunter United Employees’ Credit Union as well as the costs of implementing our digital strategy which underpins our ability to compete as an alternative to the major banks.

“We are focused on maintaining our peer leading efficiency, with the ratio of non-interest expense to operating income for the Group also improving to 71.5%, down from 72.8% for FY2020.

“We are very pleased to report that as at 30 June 2021, only 0.01% of the total loan portfolio was in receipt of financial hardship assistance in the form of loan repayment moratoriums arising from COVID-19, significantly down from 4.8% at the previous year end.  We recognise however, that there is likely to some deterioration in this metric, as our members call on us to support them in dealing with the challenges that are resurfacing with the unfortunate outbreak of the Delta COVID variant.

Strategic execution and managing regulatory reforms

“Despite the disruption of the past year, we showed disciplined execution on a high volume of key strategic and regulatory change priorities. We brought our new lending platform to market, completed the systems integration to achieve the full benefits of the merger with Hunter United, and continued to improve our digital capabilities with enhancements to our internet banking application.

“As we saw in the last financial year, our members’ preferences are shifting, and we know that they want to connect with us through a combination of physical touchpoints and secure online banking options. Many that previously did their banking solely in branches are now comfortable with digital engagement and the speed and convenience of digital channels and payments tools.

“Like all ADIs, IMB Bank has also dedicated extensive resources to addressing legislative reforms flowing from both the Financial Services Royal Commission and emerging industry obligations. Many of these projects will be delivered in the first half of FY2022 and build on our proven track-record of doing what is right for our members and our commitment to continuous improvement in line with community expectations.

“In recognition of our inclusive culture and the values that underpin everything that we do at IMB, we were exceptionally proud to be awarded Employer of Choice for Gender Equality by the WGEA in FY2021. 

Commitment to our members and their communities

“We have continued to provide a range of support measures for members requiring financial assistance and are working closely with our small business members to tailor their banking arrangements to help them withstand the ever-changing market conditions.  Our people have shown incredible resilience in keeping branches open under the highest of community restrictions and developing solutions to minimise any disruption to member service.

We are also very proud to have been able to allocate IMB Community Foundation grants of $600,000 to support community organisations, assisting them to reach those in our areas of operation that are most in need. We are currently assessing the applications received for FY2022 grants and look forward to announcing the successful projects later in the year.

Final Dividend

“The Board has declared a final dividend of 9 cents (against 7.5 cents for the previous corresponding period) which will be paid to registered shareholders at the close of trading on 1 September 2021.  This brings the full year dividend to 18 cents, which based on shareholders’ interest in the contributed funding of IMB Bank, represents a 78.4% payout ratio.

“In making this decision the Board has had regard to a range of factors including the level of financial performance, renewed economic uncertainty and the difficulty in forecasting the impacts of the latest COVID-19 outbreaks on the economy and the organisation.

Looking ahead

 “The latest restrictions affect locations in which IMB Bank has a strong presence, requiring on us to call on our organisational resilience. We are cautious about the rate at which the economy will re-open, with lockdowns and the success of the vaccine roll-out being key to increased levels of economic activity. Our sustainable financial performance and proven track record of delivering on our strategic ambitions in difficult circumstances gives us confidence that IMB Bank is well placed to withstand the challenges that have resurfaced.”

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

Date: 25 August 2021