Newcastle Permanent benefits from innovation and supporting customers

  • By Zilla Efrat

Newcastle Permanent Building Society has enjoyed one of best financial years ever, fuelled by growing both deposits and home loan approvals despite the challenges of COIVD-19 restrictions, historically low-interest rates and continued economic uncertainty.

“In the face of challenging headwinds, our continued focus on innovation and supporting our customers led us to deliver a strong and balanced financial result, increasing net profit after tax to $42.7 million, an almost 42 per cent Jump on last year,” says Newcastle Permanent CEO Bernadette Inglis.

“Helping thousands of customers into a new home, our new home loan approvals reached a record $2.5 billion, representing a 51 per cent increase on last year. This saw our home loan portfolio grow to $9.2 billion, up 3.7 per cent year-on-year.

“Customers also took advantage of the low-interest rate environment to repay their loans faster, with 92% of customers ahead on their repayments.

“Deposits continued to contribute the majority of our funding during the year, with overall deposit balances increasing 5.2 per cent to $8.9 billion. In addition to strengthening our liquidity position, this has enabled us to diversify our high-quality home lending portfolio.”

Newcastle Permanent’s net interest margin improved to 1.84 per cent. Its total assets grew 5.4 per cent to $11.7 billion and its capital adequacy ratio held steady at 20.7 per cent, significantly above all its major competitors.

Looking ahead, Inglis says Newcastle Permanent accepts that the long-term effects of historically low-interest rates and the global pandemic have not yet been fully felt.

“We are preparing for a more challenging forward environment characterised by ongoing market and economic uncertainty.”

Jeff Eather, chair of Newcastle Permanent, confirms that Newcastle Permanent and Greater Bank are still exploring the potential commercial and member benefits of their potential merger.

Both groups signed a memorandum of understanding to explore merging in August 2021.

“Recognising we’ve just recorded one of our best years ever, this merger is still a unique and highly compelling opportunity to create a large, forward-thinking, innovative customer-owned mutual. It will really solidify our place in the market and set us up for future success,” says Eather.

“Our collective capabilities and capacity will enable us to invest more in technology and innovation, and offer even greater value for our customers, which is always our ultimate goal,” he says.

Bringing the two Newcastle-based organisations together would great a group with a collective $19.8 billion in total assets and a combined 600,000 strong customer base.,

Completion of the merger remains subject to due diligence and then approval by eligible members of both Newcastle Permanent and Greater Bank, and regulators.

Eather notes: “At Newcastle Permanent, investing in our people and helping them forge careers is a key part of who we are. This was evidenced by almost 15 per cent of our people being promoted during the

year and an impressive uplift of 10 per cent on our organisational employee engagement score to 86 per cent. Both of these outcomes reflect our people’s dedication, energy and resilience.”

In the past year, he says rolled out a new banking app that is more intuitive and offers greater functionality and introduced new ID check tools for more convenience.

Additionally, the introduction of digital signatures has had an incredible response, with 93 per cent uptake from those customers offered the option.

“In FY2020/2021 we also invested significantly in our branch network, which remains a critical part of our future. Extensive upgrades at our Coffs Harbour, Glendale, Gosford, Mount Hutton, Raymond Terrace, Gosford and Wallsend branches delivered fresh and modern physical spaces that better meet changing customer needs and preferences. And the feedback has been wonderful, with customers complimenting the new look and feel,” says Eather.

Eather says another important milestone in the reporting year was the creation of the Newcastle Permanent Environmental, Social and Governance Framework, which will ensure the building society remains a sustainable and community-supportive organisation into the future.

“We will make every effort to minimise our operational environmental footprint by improving our energy, water, waste and transport practices. We will continue to promote and measure equality and diversity within our workforce and empower our people to proactively support their communities.