U.S. Markets close in 5 hrs 53 mins

Edited Transcript of MYS.AX earnings conference call or presentation 23-Aug-19 12:01am GMT

Q4 2019 MyState Ltd Earnings Call

Aug 27, 2019 (Thomson StreetEvents) -- Edited Transcript of MyState Ltd earnings conference call or presentation Friday, August 23, 2019 at 12:01:00am GMT

TEXT version of Transcript


Corporate Participants


* David Harradine

MyState Limited - CFO

* Melos Anthony Sulicich

MyState Limited - MD, CEO & Director


Conference Call Participants


* David Ellis

Morningstar Inc., Research Division - Senior Equity Analyst

* Nathan Zaia

Morningstar Inc., Research Division - Equity Analyst

* T.S. Lim

Bell Potter Securities Limited, Research Division - Head of Research and Banks & Insurance Analyst




Operator [1]


Thank you for standing by, and welcome to the MyState Limited FY '19 Results Call. (Operator Instructions)

I would now like to hand the conference over to Mr. Melos Sulicich, Managing Director and Chief Executive Officer. Please go ahead.


Melos Anthony Sulicich, MyState Limited - MD, CEO & Director [2]


Thank you, and good morning, everyone, and welcome to MyState 2019 Full Year Results Conference Call. I'm Melos Sulicich, Managing Director and CEO of MyState Limited, and with me is David Harradine, our Chief Financial Officer.

We'll be speaking to the investor presentation which has been lodged on the ASX and is also available on the MyState Limited website.

I'll start by covering the highlights for the year and some of the performance drivers of this year's results, and David will take you through the financial results in more detail. Then I'll provide an overview of our strategy and priorities, covering the external environment and the company's outlook. We welcome your questions after the presentation, and the call moderator will provide further instructions.

I will begin with the key highlights on Slide 4. Over the last few years, we've invested heavily in technology through digitalization with the aim of improving our customers' experience. We believe we're now in a position to start unlocking the value of that investment. We have a higher proportion of digitally aware and enabled customers than ever before, and we're well positioned to attract new banking and wealth management customers.

The quality of our service and the ability to scale provide a more efficient platform with faster turnaround times that underpins above-system growth in loans and deposits. We're also investing in a multiyear project which will improve the digital experiences of our wealth business, and we completed -- we've completed the year with a new decade-high $1.17 billion in funds under management.

As a smaller bank, we believe we're nimble enough to make technology improvements quickly. This year, we've installed new finance and risk management systems as well as continued to refine and enhance our customer-facing systems.

After a difficult first half, we repriced mortgages in January, and then in the second half, the fall in bank deal spot rate in anticipation of the Reserve Bank cash rate capital to ease funding costs. We said at the first half that we'd deliver a full year profit of around $30 million, which is what we delivered. The sale of the financial planning business added a further $1.2 million after tax, resulting in a $31 million post-tax profit for the year.

[Delisting] our retail financial planning business has freed funds for reinvestment. The business has performed well and is a linked and well-run and quality business, which enabled us to achieve a price premium in the market at the time.

Its sale was a strategic decision because financial planning relies on face-to-face contact and advice with significantly different regulatory and compliance obligations to other parts of their business. We now have a simpler, more streamlined wealth business that can expand in a scalable way, similar to our digital banking growth strategy.

On the next slide are results of a brand survey, which showed customer trust in banks, comparing us with the major banks and other regional banks competing in Tasmania. We were delighted that it shows MyState as more trusted than both major and regional banks. We believe this is the outcome of exceptional customer service and by simply doing the right things repeatedly.

Our technology platform was implemented from the start to serve customers. The staff has information at their fingertips they can focus on their banking skills and serve customers well.. The loyalty of our customers is increasing as recognized by MyState Net Promoter Score which, at plus 42, really is as good as it gets in the banking industry in Australia.

We're among the first banks to transact on a new payments platform, and we support all the pays, including most recently, Fitbit and Garmin Pay.

Other important achievements have been the delivery of online origination, which has expedited services for home loan applications, and completion of an online and mobile banking platform, which allowed us to introduce and deliver these new deposit products.

Our total loan book passed the $5 billion milestone during the year, showing a combined -- compound annual growth of over 9% since 2014. Our strategy remains to become a stronger company by building both sides of our balance sheet, supported by a scalable platform that drives efficiency and lower cost to serve. We're continuing to increase our book at a rate above system and becoming a larger federal organization, more able to leverage economies of scale.

Turning to Slide 6 and some of the key metrics. We've engineered our processes to support revenue growth, enabling us to build scale while controlling costs. We delivered positive jaws in the second half, with revenue above the first half and costs lower than the first half. We also said we'd delivered a good second half, and we delivered what we said we would.

Our total loan book increased to almost 11% over the year, and we're well capitalized with a capital efficiency ratio at 30th of June of 12.9% and common equity Tier 1 ratio of 11.1%, comfortably above regulatory requirements.

Online innovation helped to actually drive 12% growth in customer deposits, which now totaled $3.7 billion. Deposits represent the most cost-effective funding source for us.

New digital products helped us to build a strong deposit culture with online originated customers more than doubling over the year.

While the first half wasn't as strong as we'd hoped, we concluded the second half with some positive momentum. The company's net profit of $31 million was a solid result that includes $1.2 million after-tax from the sale of the financial planning business. The transaction will be NPAT-neutral for MyState in future years.

And the Board has maintained a fully franked final dividend of $0.145 per share, which takes dividends for the full year to $0.2875 per share, in line with last year.

And I'll hand it over to David to take you through the financial results in some more detail.


David Harradine, MyState Limited - CFO [3]


Thank you, Melos, and good morning to everyone.

So I'll turn to Slide 8, which shows that earnings after-tax fell marginally below the prior year, down 1.5%. This translated into a similarly lower EPS and ROAE. And as I've indicated at the half, the theme of a challenging environment for banking was the key feature in the reported results announcements of regional and major banks. And the recently reported bank sector results confirm this continues to be the case.

Our first half result was rightly characterized as a difficult result. Margins were under pressure with earnings down 9% at the time. We committed, at that time, to an improved second half, and we've delivered on that commitment.

Sector trends of continued lending competition, falling bank fees, slowing credit growth and regulatory costs have persisted in the second half. However, compared with the first half, our NIM stabilized for improved funding conditions and focused margin management. Operating income increased by 2.7%, and costs fell by 1.4%, and the resulting positive jaws improved our cost-to-income ratio and enabled second half earnings growth of 22%, or retained excluding the sale of the financial planning business.

Returning to shareholders -- return to shareholders have also improved across the half with EPS lifting 15% and ROAE up 194 basis points on the first half.

The remainder of the presentation includes details around the drivers of this solid financial performance, and these broadly center around top line momentum, with home loan book growing well above system, coupled with exceptional credit performance, decade-high FUM levels within our wealth business, with the sale of financial planning providing an opportunity to reinvest for growth, robust capital ratios positioned well above APRA's unquestionably strong requirements and system-driven productivity improvement with a scalable platform to manage growth whilst containing costs.

Now turning to Slide 9. Net interest margin experienced considerable pressure during the first half, with the predominant factors at play in a competitive market comprising of home loans as well as elevated funding costs arising from historically wide BBSW spreads.

As the chart on the bottom right-hand side indicates, we maintained a relatively flat NIM across the second half. The lending market remained highly competitive throughout the year. However, we managed our lending margins very tightly in the second half. Our service and turnaround was a key differentiator rather than pricing and continues to see a swing in both retail and broker channels.

Repricing of the loan book by about 15 basis points early in the second half also aided in preserving margins in the back book.

Funding markets also eased in the second half, which was indicated in the BBSW chart in the top left-hand side.

After rising sharply during the first half, BBSW was on average 16 basis points lower in the second half compared with the first half. The margin outlook for the banking sector continues to be on a less stable footing following successive RBA cash rate cuts in June and July and with the vast majority of banks passing on substantially all the reductions to borrowers and not being able to mitigate all of these through deposit repricing.

MyState does have a higher proportion of its funding base with long-term securitization in wholesale funding and customer term deposits and less exposure to 0 or near 0 rate customer deposits where there is -- much of the pressure is being felt across the sector.

Our wholesale funding costs are dropping as are our term deposit costs which should ease some of the margin pressure going forward as deposits mature. Continued vigilant margin management will remain a key focus for our business as we continue into FY '20.

Taking a look at Slide 10, our overall expenses increased 2.9% on the prior year or 2% excluding increased technology-related depreciation and amortization expenses.

We continue to maintain a focus on reshaping the cost base to drive investment in customer acquisition and marketing as well as supporting the technology road map for our digital platforms.

We also continue to invest in our risk management, regulatory and compliance systems and capability, which continue to be a real strength for MyState.

Operating leverage within the business continues to improve with overall reduction in personnel costs, notwithstanding having grown our loan and deposit books at 11% and 12%. As Melos mentioned, we've built a scalable platform to drive efficiency and lower our cost to serve.

As revenue continues to come under pressure across the banking sector, we remain focused on tightly managing operating costs, improving productivity and operating leverage and creating capacity to repurpose nonvalue-added costs towards customer acquisition and digital experience. This focus has continued to firm up our customer NPS, which is at plus 42. And as Melos has said, it really is as good as it gets in the banking sector in Australia.

Moving to the next slide, 11. NPAT declined 1.5% on the prior year or 4.8%, removing the impact of the sale of financial planning. Banking income marginally improved over the prior year, which has bucked the trend across the sector, notwithstanding a very difficult wholesale funding environment during the first half.

Wealth management income fell on account of lower trustee revenues, which experienced volatility from time to time, whereas funds management income lifted on the back of funds under management growth.

As I mentioned a moment ago, increased operating expenditure was on account of targeted marketing [cost to] acquisition spend and noncash depreciation, amortization from our technology and digital investments.

The group continues to benefit from very low impairment charges, a result of our very conservative credit settings. The highlight has been returning to positive jaws in the second half and delivering strong earnings growth from first half, excluding the sale of financial planning and delivering to our first half guidance.

The result is exceptionally clean with an underlying strength. And it's worth highlighting that with a simplified business and robust risk culture, we've had no need to account for the types of remediation and other regulatory noncompliance costs afflicting some of our peers.

Turning to the loan portfolio on Slide 12. Our loan book grew 11%, pushing through $5 billion during the year on the back of record applications and settlements. Growing in a highly competitive market amidst elevated funding spreads for most of the year has placed pressure on margins. The growth continues to support a broadening of our geographic credit footprint to be more representative of Australia, particularly at the Eastern Seaboard and to take advantage of the operating leverage we've built into the business. And as you can see in the geographic spread of our loans, we continue to maintain very low absolute credit exposures in the states and territories where other banks are reporting some pockets of stress.

On to Slide 13. Through conservative credit settings, we have cultivated a lending portfolio of high-quality loans delivering exceptional credit performance. Impairment charges remained at historic lows and well below industry benchmarks with 1 basis point of gross lending assets. And our 30- and 90-day arrears have continued their very low trend, as demonstrated in the charts to the bottom of the slide.

Whilst we've grown our home loan book well above [15], our focus has been on lower LVR owner-occupied loans. The chart to the top right-hand side demonstrates strong growth in low LVR loans of 13.5% and subdued growth in high LVR lines of 2.4%. In expanding our balance sheet quite rapidly over the past 4 years, we've been very deliberate and measured in targeting low risk, owner-occupied lending with low loans valuation ratios.

Our deliberate and measured approach to growing in low-risk, owner-occupied lending with low LVRs underpins our very low credit impairments.

Our funding composition on Slide 14 has continued -- seen continued improvement in our customer-funded ratio rising to 68.6% of our funding base on the back of 12% growth in customer deposits. Growth from the prior period has been predominantly from term deposits and long-term securitization, supporting our funding tenor and capital. The introduction of our Glide and Bonus Saver products has also increased customer growth management through digital platforms into our at-call customer deposit categories.

Clearly, [our space] securitization funding [paid] to BBSW impacted our margins in the first half. However, as BBSW outlook continues to improve and a relatively lower level of our funding base attracting 0 rate in interest provides some support for margins where there's an even bias in the cash rate.

Turning to Slide 15. We continue to maintain a robust and efficient capital position, notwithstanding the strong lending growth during the year. Improved profitability in the second half supported stronger organic capital generation. And whilst lending growth was well above system, growing to lower risk-weighted loans lessened the impact on capital. MyState Bank remains well capitalized and well positioned to meet APRA's unquestionably strong requirements.

The capital position improved further since 30 June, with the capital on the sale of the financial planning business being able to be reallocated within the group and private placement RMBS occurring in July.

Moving to Slide 16. Revenue for the wealth business fell by 3.3% on account of a decline in the trustee business. This revenue oscillated between FY '17 and '19.

FUM grew on the prior year to a decade-high of $1.17 billion, and improved funds management operating income was achieved on the back of this.

As Melos mentioned at the outset, we took a strategic decision to sell the financial planning business in order to further simplify the business as well as unlock capital for reinvestment for growth. We view the funds management business as providing further opportunity for growth and revenue diversification in a fairly challenged banking sector, and we've embarked on a program to develop contemporary funds managed products and digital capabilities to grow that business.

And finally, moving to Slide 17. In addition to delivering strong core financial outcomes, we also measure success in our contribution to community well-being. Well before the advent of the Royal Commission, MyState has always been focused on great customer outcomes as well as great community outcomes, and this is evident in our exceptional customer NPS scores and in our long-standing contribution to growing the communities in which we operate.

The MyState Foundation has awarded more than $2 million in grants to around 100 not-for-profit organizations since inception with a particular focus on empowering youth. We're a proud supporter of the Hobart Hurricanes, the Big Bash women's team. The MyState Student Film Festival is a fantastic initiative to support the students across a range of age groups to explore and express their digital and film creativity. And the group also supports communities through a range of other initiatives, including the Hardie Fellowship, International Women's Day and Cape Hope Foundation.

The Tasmanian economy continues to attract wide interest across the country as a well-performing economy. As MyState continues to grow and expand its business nationally, the direct impact of the Tasmanian economy on our performance lessens. However, with around 40% of the bank's loan book still domiciled within the state, the economy remains relatively important.

A measure of economic activity, state final demand increased 5.2% year-on-year fueled by strong growth in household consumption. Population growth has also been affected, traditionally [trailing] national growth rates by a wide margin and has now narrowed that margin growing at 1.2%, the fastest rate in 27 years being driven by solid interstate and overseas migration.

The tourism sector continues to support the economy from increases in short-term arrivals and visitations with 1.3 million visitors arriving, up 3%.

And finally, Hobart continues to lead the nation's house price growth with dwelling values increasing 2.9% in the year to June 2019, which is part of the national trend in some of the major capital cities.

And on that, I'll hand you back to Melos.


Melos Anthony Sulicich, MyState Limited - MD, CEO & Director [4]


Thanks very much, David, for that detailed explanation there.

So just a few words now on the sector overview on Slide 19. The Reserve Bank's move to reduce the cash rate and with further cash cuts predicted, together with slower house price growth and wage growth, has led to slower credit growth. This is contributing to a more competitive home lending environment as well as changing customer deposit dynamics. This is likely to put further pressure on NIM in the foreseeable future.

We continue to grow both sides of the balance sheet whilst managing costs carefully. We're working hard to manage pressures on net interest margin whilst balancing the need for the home loan and deposit customers. It's clear that we're in a position or a period of very low rates, that is likely to be protracted and thus efficiency is going to be the key to our ongoing success.

The Australian economy is expected to grow around 2.5% through 2019 and slightly more through 2020. [The unemployment] rate is currently around 5.2% and is expected to [decline] slightly over the next couple of years. Although economic signals are mixed, we do expect house pricing to remain stable, providing some support to the economy.

There are some early signs that the recent tax cuts and cash rate reductions are having a positive impact on the economy, but time will tell if they have property (inaudible).

Following the Hayne Royal Commission, the banking industry has moved to restore trust. MyState Bank has become a signatory to the Australian Banking Association's Banking Code of Practice, which sets a new standard of customer service for the banking industry.

We've invested heavily in preparing ourselves to be compliant with this code over the course of the past year. The banking environment, we believe, continues to be [unequaled enough] for smaller banks. We need to hold significantly more capital [to get loans] in the major banks, which reduces our ability to lend, earn a return and to invest despite the loan carrying the same individual risks.

The major banks also benefit from being considered too big to fail, which provides a funding advantage recognized in the issuer credit ratings. We believe more needs to be done to remove some of the regulatory impediments to competition to ensure there's a genuine competitive environment for banking services in Australia.

The Royal Commission also spurred significantly higher regulatory oversight, which clearly benefits consumers. But we also believe the onus of this compliance falls disproportionately on smaller banks. And we continue to urge the federal government and regulators to take steps for the smaller banks to compete more effectively. Smaller banks provide an important source of competition in the market, which benefits consumers and the economy.

Turning now to Slide 20 on our strategic priorities. We continue our strategy of digitalization to make it easy for customers to bank with us and to streamline and manage our cost base. We streamline processes using lean methodology and recognize -- reorganized our business to improve customer services. Our goal is to improve our position as a modern, highly scalable digital bank. Investment in digital continues, customer data analytics and CRM help us to anticipate customers' needs, tailor products and provide targeted services at lower average unit cost. Additionally, automating our back-office processes with robotics is an area which we're now using to improve speed and reduce cost.

The replatforming of our wealth management business has begun, and this will open access to what has been a Tasmanian business to a broader national market. This multiyear project will increase consumer self-control of their assets and produce new products as well. We want to ensure close relationships with our communities. And as we increase our presence along the Australian Eastern Seaboard, we've opened now an office in Sydney to support business growth. This continued focus, we believe, over time, will deliver sustained shareholder returns.

And finally, looking ahead, we anticipate more moderate but still above-system loan growth. And our investment in innovation and support continued deposit growth. In a highly competitive market, we are managing margins carefully to ensure that we continue to receive the benefits of increased scale, which involves signing more deposit customers and managing lending rates to produce optimum return to shareholders.

Having rebranded The Rock as MyState Bank early in the year, we now have a single national banking brand. Marketing, sponsorships and community activity are increasing MyState Bank's brand awareness. Our ongoing digitalization strategy remains firmly focused on our customers and providing superior service.

Technology continues to increase our ability to provide services across Australia in the way that just was not possible in the past. We now have a more streamlined, scalable wealth business. Digital investment will open up the opportunity to offer income funds nationally, and we expect to launch new services in the coming period. We have a clear organic revenue growth strategy and significant opportunity to build our business, an enthusiastic team and a scalable platform.

So thank you for your time, and I'd now like to hand over to the operator and answer any questions you may have. The operator will now provide instructions for you.


Questions and Answers


Operator [1]


(Operator Instructions) Your first question comes from T.S. Lim from Bell Potter.


T.S. Lim, Bell Potter Securities Limited, Research Division - Head of Research and Banks & Insurance Analyst [2]


Well done. Just a question on The Rock and Central Queensland. What are you actually seeing out there? Are you seeing some sort of recovery in house prices and things like that in mining towns?


Melos Anthony Sulicich, MyState Limited - MD, CEO & Director [3]


There's still a bit of a carryover from the bubbles of the years like -- that some of the mining towns went through a few years ago. We're not seeing any issue in terms of bad debts or things like that out there. We've seen some increased activity in application rates with our lenders through the branches there and also some increased activity in deposit and account opening rates. So I think the economy up there has recovered pretty well. Having said that, there was quite a big bubble there sort of 5 or 8 years ago. And that's going to take some time to look at [splicing] the system properly I think.


Operator [4]


Your next question comes from David Ellis from Morningstar.


David Ellis, Morningstar Inc., Research Division - Senior Equity Analyst [5]


David, I've got a question on net interest margins on Slide 9. You mentioned that potentially easing bias interest rate environment that the bank's exposure to securitization funding and term deposit funding would provide some buffer or some [bend] to -- against lower lending rates -- potentially lower lending rates in the future. Could you just explain that, how that works, please?


David Harradine, MyState Limited - CFO [6]


Yes. Well, what I was just trying to highlight is that some of the other banks have got 0 rates or near 0 rates deposits which just cannot be repriced down any further. And as you're repricing down your assets and rate income [on those], it's very difficult to [recalculate on] 0 rate products on the liability side, and near 0 rates got a natural floor as well.

What I was highlighting there is there is with our securitization long-term funding that is peaked to be [the established] that will tend to be moving normally -- move in line with a fairly considerable spread to the cash rate so there'll be fairly [high] on spreads. So that's come off quite considerably, and that spread is narrowed. And so we're seeing some of the benefits of that coming through to us. But of course, the first half price, that was sort of an opposite challenge. And then we could see, there it's still -- got to reprice those down more of a 0 rate, nonrate deposit. But they do take some time just to wind through so you don't get the obviously -- the needed benefit, but as they mature, they want -- and we're seeing about 6 basis points on a monthly basis coming through in our CDs currently. So...


David Ellis, Morningstar Inc., Research Division - Senior Equity Analyst [7]


So overall, I know Melos mentioned that the outlook for margins is that there's going to be pressure on margins. But it sounds like with the lower wholesale funding costs coming through, that there's a little bit of -- it might not be as bad as expected.


David Harradine, MyState Limited - CFO [8]


There will be pressure inside that because if there are further rate cuts, the question will then become is there sort of natural floor on some of these other deposit products, where people might choose -- or depositors might choose alternative areas to place their funds. So it just depends on where the market moves on the asset pricing. And I know that the majors passed somewhere between 43 and 45 points on the last rate cut on their asset side, and the regionals passed on somewhere between 37 and 40. So I imagine that, that would probably [come in the year specific] to manage margins rather than necessarily on deposit pricing. But in summary, there are some headwinds from margins across the sector going forward.


David Ellis, Morningstar Inc., Research Division - Senior Equity Analyst [9]


Okay. I've got another question to do with the cost base and the cost-to-income ratio set for the 2019 financial year. Cost-to-income ratio, just under 65%. Have you still got a longer-term, on the [interim] target of getting down to 60% of that cost-to-income ratio? And if so, when do you see that being achieved?


David Harradine, MyState Limited - CFO [10]


David, we'd love to get it down, and we've been working pretty hard to get it down for the last number of years. And that's sort of our target, to almost becoming the Holy Grail. With continued pressure on margins, it just becomes more and more difficult to get there. So we'll continue to focus on it. It's one of our absolute key metrics that we look at and focus on. But with margin pressure and the like, it's just becoming more and more difficult.

What we can say is that our cost growth and focus is absolute. And as you can see in the presentation here, it's relatively flat. The number of people that we've got employed in the business has reduced reasonably substantially over the last few years, notwithstanding the financial planning side, it's in the core banking business. We've been able to take cost -- take people and cost out without impacting customer service and also on a higher base. But given the cost-to-income ratio, again, this has proven to be one of the more difficult things that we're challenged with at the moment because of the -- more because of the revenue situation and the margin situation than the other dynamics in the P&L.


Operator [11]


(Operator Instructions) Your next question comes from Nathan Zaia from Morningstar.


Nathan Zaia, Morningstar Inc., Research Division - Equity Analyst [12]


I just have a couple of quick ones. Firstly, on the split between owner-occ and investor loans, I'm not sure if you have disclosed any split in your accounts. But I was just wondering if you could comment. Obviously, owner-occ has been very competitive and probably will remain so. Do you see any opportunities to become a little bit more aggressive in investor loans?


Melos Anthony Sulicich, MyState Limited - MD, CEO & Director [13]


Thanks for that. The split between our owner-occupied and investor loans hasn't been disclosed in the accounts or the investor presentation materials, or the interest-only. But just on both of those, the investor loans comprised 16% of the home loan portfolio. So it's quite low. And on the interest-only, that's 15%. So that's very low in terms of our overall book exposure.

And I think I'll agree with your comment that there are some opportunities in there for us because it's a part of the market that does provide a higher margin. We have focused on it, but that part of the market's also starting to become more competitive and also has shrunk substantially over the last sort of 2 or 3 years, [so have to put on their] speed bumps. And we don't see any change to that in the last -- any great change in the last 6 months or so. It's mostly something that comes back to the market in the near future as the housing market becomes more popular for investors again.

I think also with the -- moving into the federal election, where the 2 sides of politics have quite different views on the tax treatment of the investment properties, that sort of slowed down the investment market a little bit. And I expect that, that might still start to grow in the near term.


Nathan Zaia, Morningstar Inc., Research Division - Equity Analyst [14]


Okay. Great. And the other thing I wanted to ask, I was wondering if you could comment on -- obviously, there's been a lot of focus on the use of HEM and lending standards. But do you see any differences across the market between the banks and the nonbank lenders in terms of lending standards? Or has that been aiding their growth?


Melos Anthony Sulicich, MyState Limited - MD, CEO & Director [15]


One of the things that we would say is that -- whilst at one level, the regulation around responsible lending is managed by APRA -- or sorry, ASIC, they make the wider uneven-handed view across the industry of the application of responsible lending standards. APRA applied to the regulated ABIs and banks a different level of what their views of responsible lending. And that has meant that there's been an increased variance between what regulated banks have been doing in terms of lending reviews and reviews on people's ability to repay loans than the nonbanks.

But that's an issue that we have been talking to the regulators about, that it's the same home loan being effectively addressed on different bases because 2 different regulators have upheld different views on what is responsible lending. And we would hope that the APRA and ASIC views merge more closely over time so that the markets will be more homogeneous in that point of view. But our view is that the nonbanks are a little bit more aggressive than the banks in their lending standards.


Operator [16]


(Operator Instructions) Thank you. There are no further questions at this time. I'll now hand back to Mr. Sulicich for closing remarks.


Melos Anthony Sulicich, MyState Limited - MD, CEO & Director [17]


Well, I'd just like to thank everybody for your attention this morning and for your interest in MyState. And for those who asked us the more clarifying questions, thank you for those as well. And I wish you all the very best for the brand new year ahead. Thank you.