Steady underlying result for WA's P&N Bank

WA's P&N Bank has delivered a steady underlying result in a tough operating environment, as detailed in the 2019 P&N Bank Annual Report – available here.

The P&N Bank Group net profit after tax was $10.3 million, a decrease of 14.9% largely attributable to fee reductions, a legacy property development provision and one-off merger related costs.

The Group’s assets increased by 2.9% off the back of solid mortgage lending growth of 4.1%, whilst member deposits increased by a healthy 6.9%.

P&N's net membership grew by 2.5% to more than 96,000 and the Bank continues to enjoy strong advocacy with industry best practice Net Promoter Scores and customer satisfaction ratings.

P&N CEO, Andrew Hadley said, “It has been a tough economic, political and regulatory environment for financial institutions this year, particularly the smaller ones, and this was exacerbated for P&N, given its substantial exposure to the WA economy and housing markets.”

The Bank's capital adequacy ratio of 15.0% remains sound despite credit impairment losses which increased by 8.1%, primarily due to a specific non-core property exposure.

Mr Hadley said "Whilst P&N is well positioned strategically, there are considerable challenges ahead for smaller financial institutions such as ours. The disproportionate cost of regulation, the necessary investment in technology and the increasing competition from non-traditional players means we must amass size and scale to best position us for an uncertain future.”

"Our proposed merger with east coast-based credit union bcu is an important first step in that regard, enhancing our service offerings for members, improving our efficiency and reducing our geographic concentration levels.”

The merger proposal has been unanimously endorsed by the P&N Board and will go to a member vote in coming weeks.

The proposed merger is subject to APRA approval.

Summary of FY 18/19 results

• The Group delivered net profit after tax of $10.3 million, a decrease of 14.9%.
• Group net interest income increased by $3.13 million up 4.3% to $75.5 million.
• Total Group assets increased $118.9 million, up 2.9% to $4,268.1 million.
• Total Group member funds, including retained earnings increased to $290.6 million.
• The Bank’s capital adequacy ratio of 15.0% remains sound.
• Total Bank assets increased by $126.3 million, up 3.0% to $4,273.4 million following sound growth in loans and advances of $123.5 million, up 3.5%.
• The Bank’s member deposits increased by 6.9% or $205.9 million to $3,177.1 million.