APRA Gives the Dividend Decision Back to the Banks

MyState Ltd is one of Australia’s smallest listed banks, commanding a tiny 0.2% 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 around 95% 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. Due to its size, MyState struggles to generate comparable margins to the majors, mainly due to its much smaller customer base and higher funding and operating costs.