Defence Bank notches strong earnings performance, asset growth remains on double-digit path

Defence Bank, one of Australia’s new Mutual Banks, has delivered a strong result for the 12 months to 30 June 2013, with many key indicators significantly outperforming the previous year as well as exceeding its internal growth targets across the board.

A gross profit of $14.3 million and a net after-tax profit of $10 million were both 19% above the budget target.

These healthy earnings numbers came on the back of a 12.25% growth in assets to $1,443 million, of which housing loan growth of 17.45% was a key factor.

Defence Bank CEO Jon Linehan said: “This is a strong performance by the bank in the current economic climate. The only area where we experienced a decline was 8.79% in personal loans, a clear indicator of a consumer reticence to take on more debt.
“We also saw a 17% increase in deposits to $1,285 million, loans overall grew by $125.6 million or 12.9% and liquidity stood at 22.9% against the APRA requirement of 15%.”

Linehan said the past year has witnessed some exciting developments for the bank that will ensure growth enjoyed in recent years remains on track.
“The Bank has revolutionised customer service by establishing Australia’s first video call centre at its Melbourne Head Office. An Australian first for a financial institution, it allows Defence Bank’s customers to talk face-to-face with a banking consultant from their home at a time convenient to them – a significant innovation.

“This is a significant innovation by the Bank that will have enormous benefits for Defence Force personnel, many of whom find it difficult getting to a branch to conduct their business.

“We have also introduced a range of new i-Phone apps and android app for our members.

“S&P awarded us a BBB+ (stable), A2 rating that is equivalent to the highest rating mutual in the industry and the Bank of Queensland and exceeds ME Bank, My State, the Greater Building Society and Heritage Building Society.”

“We have also built on the success of Retirement Savings Accounts (RSAs) and Self Managed Superannuation Funds (SMSFs) to the extent where they now represent

a larger percentage of our deposit base than traditional retail term deposits,” he said.

Defence Bank is now of nine mutual banks that evolved out of the Federal Government’s Competitive and Sustainable Banking system reforms that were introduced in 2010.