Teachers grows profit by 14.1% as consumers shift to mutuals

  • By Christine St Anne

Teachers Mutual Bank logged a net profit of $31.8 million for 2018 on the back of solid loan and deposit growth as consumers increasingly eye the mutual sector.

Earnings were up 14.1 per cent on last year’s $27.9 million with strong growth being achieved across the board.

Home loans – both investor and owner-occupier – grew by 10.5 per cent to $5.4 billion, more than double system growth of 4.97 per cent.

Net interest margin -  the gap between what banks pay to borrow money and the interest rates it lends at - was a healthy 2.13 per cent although down 4 basis points on the previous year.

Household deposits grew 6.7 per cent, compared to system average growth of 5.7 per cent.

TMB chief executive Steve James said that people are starting to shift to the mutual sector.

“While there was not much movement in the early days, a lot of people making the big decisions and taking out a home loan with the mutual,” James said.

“While we offer better interest rates, they also realise we are fairer to deal with.”  

James added that the outcome of the royal commission will be a “wait and see” with the final report expected to be handed down in February.

“We will have to see how royal commission inquiry affects us, but we are hoping to build membership from that report as people look to move to the mutual sector.”

Total membership grew to 198,000, up slightly by 4 per cent, however, in October, the bank passed the 200,000 milestone.

Regulatory challenges

The bank’s asset base also grew by 5.8 per cent to $7.1 billion.  

Overall, the bank said that strong growth in deposits meant better utilisation of surplus capital, keeping capital adequacy at 15.65 per cent - within its targeted range.

The bank also conducted a successful tier capital raising of $20 million in 2017.  

On the wholesale market, the bank received strong interest in its Medium Term Note Issuance in  July, issuing $200 million.

James acknowledged that while the mutual sector has consistently put its members first, he anticipates that the broader financial sector will face further regulatory changes.

“TMB continues to support the Customer-Owned Banking Association’s campaign to ensure this regulation does not disproportionally impact the sector."