MyState Ltd: Steady Growth Amidst Strategic Expansion in Q1 2025

As we dive into the first quarter of 2025, MyState Ltd (ASX:MYS) has delivered a solid earnings report, showcasing steady underlying profits and a strategic focus on expansion. The company's first-half results, released on February 19, 2025, highlight its commitment to growth and margin management, as well as its successful merger with Auswide Bank. Let's take a closer look at the key highlights and what they mean for investors.

Steady Profit Growth and Margin Management

MyState reported an underlying net profit after tax of $17.5 million for the six months ending December 31, 2024, in line with the prior corresponding period. Despite a slight decrease in statutory net profit after tax, which includes merger-related costs, the company maintained a stable net interest margin (NIM) of 1.45%. This demonstrates MyState's ability to balance growth and margin while controlling costs in an inflationary environment.



Customer and Lending Growth

MyState's customer and lending growth story remains strong, with customer deposits rising 2.2% to $6.1 billion and home lending increasing 0.3% to $8.0 billion. The company welcomed over 14,000 new to bank customers during the year, reflecting its continued customer focus and the success of its new internet and mobile banking platforms. Arrears remained below industry averages, with 90+ day delinquencies stable at 0.44%.

Merger with Auswide Bank

The merger with Auswide Bank, announced in February 2025, is expected to deliver significant value accretion and be EPS accretive from FY26 on a post synergies run rate basis. The combination of two high-quality, complementary businesses will deliver significant scale, contributing to improved operating efficiency from a larger balance sheet and increased funding flexibility. The merger is expected to become effective in mid-to-late December 2024, subject to customary regulatory, Auswide shareholder, and third-party approvals.

Capital Position and Future Investment

MyState's capital position has strengthened with a total capital ratio of 16.4% at 30 June 2024, up from 15.4% at 30 June 2023. This increase provides capacity for future investment and growth, supporting the company's strategic expansion plans. The MyState Board has declared a stable final dividend of 11.5 cents per share, taking the full year dividend to 23.0 cents per share, representing the mid-point of the MyState target payout ratio range.

Looking Ahead

MyState Ltd's steady underlying profit growth in Q1 2025 aligns well with its strategic expansion plans, particularly the merger with Auswide Bank. The company's focus on growing profitably while delivering on strategic initiatives has set strong foundations for future growth. The merger with Auswide Bank is expected to deliver significant scale advantages to the Group, enhance operating efficiency, and increase funding flexibility. As MyState continues to execute on its growth strategy, investors can expect a strong performance from the combined entity in the coming years.

In conclusion, MyState Ltd's Q1 2025 earnings call highlights the company's steady profit growth, customer and lending expansion, and strategic merger with Auswide Bank. With a strong capital position and a focus on future investment, MyState is well-positioned to continue delivering value to shareholders. As an investor, keeping an eye on MyState's progress and the successful integration of the Auswide Bank merger will be crucial in the coming months.