Mystate Earnings Declining, but Loan Growth Expected to Be Beneficial in the Medium Term

MyState is a small listed Australian bank, commanding a tiny 0.3% of the mortgage market. A key point of difference, though, is MyState’s large exposure to housing, and in particular, owner-occupied and low loan/value ratio loans. Housing loans make up most of MyState’s total loan book, in comparison to roughly 65% (on average) for the major banks. This contributes to the bank’s sound credit quality, with the lowest arrears and bad debts in the industry. Because of its size, MyState struggles to generate comparable margins to the majors, as it has a much smaller customer base and higher funding and operating costs.