MyState delivers 41% underlying profit lift as Auswide merger thesis pays off
In its FY26 Results Investor Presentation released on 25 August 2026, MyState Limited outlined a year of accelerating earnings growth for the period ended 30 June 2026, with underlying net profit after tax (NPAT) up 41.2% to $58.3m and statutory NPAT up 58.0% to $56.2m.
Management framed the result as evidence that the Auswide Bank merger, completed in February 2025, is translating into genuine earnings growth rather than scale alone. An improved earnings mix and momentum across the group’s core lending and wealth businesses supported the lift.
The diversified financial services group also confirmed full-year dividends of 24.5 cps fully franked, an increase of 3.0 cps on FY25.
Key headline metrics from the presentation include:
- Underlying NPAT: $58.3m (+41.2% on the prior corresponding period)
- Underlying EPS: 34.3 cps (+11.7%)
- Total loan book: $14.0b (+7.2%)
- Customer deposits: $10.6b (+4.0%)
- Higher-return businesses: 11.3% of group profit, up from 6% in FY25
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FY26 financial results at a glance
The presentation detailed a scorecard showing rising income, an expanding margin and improving cost discipline. Total operating income rose 37.1% to $255.9m, while the group cost-to-income ratio improved by 156 basis points to 66.5%.
Because FY25 only included Auswide Bank from 19 February 2025, the headline growth figures are flattered by the timing of the merger. On a like-for-like pro forma basis, underlying NPAT was up 22%, offering a cleaner read of organic performance.
| Metric | FY26 | FY25 | Change |
|---|---|---|---|
| Total operating income | $255.9m | $186.6m | +37.1% |
| Underlying NPAT | $58.3m | $41.3m | +41.2% |
| Underlying EPS | 34.3 cps | 30.7 cps | +11.7% |
| Net interest margin | 1.50% | 1.47% | +3 bps |
| Group cost-to-income | 66.5% | 68.0% | -156 bps |
Rising income, an expanding margin and a falling cost ratio together point to improving operating leverage across the merged group.
Margins and returns trending up
The presentation highlighted an improving margin trajectory through the year. Net interest margin (NIM), the difference between what a bank earns on loans and pays on deposits, reached 1.54% in the second half versus 1.46% in the first, with an exit NIM higher than the full-year average.
Underlying return on equity (ROE) rose 60 bps to 7.9%, while underlying return on tangible equity (ROTE) rose 80 bps to 9.7%. Management attributed the NIM improvement to the growing contribution from equipment finance and liquidity and funding benefits from operating under a single banking license.
Merger integration delivering ahead of the next value phase
Management noted the Auswide Bank integration remains on track, with all major integration decisions now made. FY26 realised synergies of $10.7m added 4.4 cps of earnings, and run-rate synergies at the end of FY26 stood at $11.8m.
The FY28 run-rate synergy target was left unchanged at $20–25m per annum. The presentation did flag an increase in the estimated integration cost from $29m to $32m, driven by a decision to implement a modern, AI-enabled core banking platform in partnership with MyState Bank’s long-term core banking provider, TCS, plus a small adjustment for higher inflation.
Reinforcing post-merger governance continuity, the Board reappointed Vaughn Richtor as Chair from 1 July 2026, with his direct involvement in the original Auswide Bank merger process seen as an asset during the remaining integration programme.
A portion of the additional investment will now be capitalised, reducing integration costs recognised in profit and loss over the three-year programme from $29m to $26m.
The presentation grouped integration progress into three stages:
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Delivered: single banking license, 158 integration initiatives, and $11.8m of run-rate synergies
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In progress: single loan origination system, single core banking platform, single retail bank brand, and operating model optimisation
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Expected: $20–25m of run-rate synergies by end FY28, and double-digit EPS accretion on a full run-rate synergy basis (against a FY24 baseline of 32.0 cps)
Synergy delivery underpins forward EPS growth and, according to management, enhances the group’s capability to pursue inorganic growth.
Understanding MyState’s diversified four-pillar model
MyState operates as a diversified financial services group spanning banking, equipment finance and wealth management. The strategic rationale is that a broader earnings base reduces reliance on thin-margin home lending, with faster-growing, higher-return businesses lifting the overall mix.
The presentation set out the group’s four core business lines:
- Home lending: $13.6b portfolio (+5.8%)
- Customer deposits: $10.6b (+4.0%)
- Equipment finance (Selfco): $371m portfolio (+134%), operating in a $40b market with an average loan size of $80,000 at a higher margin
- Wealth (TPT): managed funds of $970m FUM (steady) and trustee services of $560m FUA (+17.6%)
Higher-return businesses now contribute 11.3% of NPAT, up from 6% in FY25, making the mix shift a central part of the group’s earnings story.
Selfco and TPT Wealth driving the mix shift
Selfco, the group’s equipment finance business, delivered a full-year NPAT contribution of $3.9m, with its book up 235% since the merger and 90+ day arrears of just 0.24%.
TPT Wealth reported operating income up 10.9% to $16.4m, benefiting from improved performance across trustee services, lending and funds. Its NPAT contribution rose 12.5% to $2.7m.
Balance sheet strength and credit quality
The group reported a total capital ratio of 15.8% at 30 June 2026, down from 17.5%. Management attributed the reduction primarily to Tier 2 capital note redemptions across the year, which had an impact of approximately -106 bps, rather than any deterioration in the underlying capital position.
Credit quality remained strong. The presentation noted 90+ day home loan arrears improved from 0.44% to 0.32%, described as below sector average. The customer deposit funding ratio held broadly stable at around 70%, and the group issued its largest senior unsecured floating rate note, $250m, in April 2026.
Balance sheet highlights outlined in the presentation include:
- Home loan book: $13.6b, with a portfolio LVR at origination of 63.9%
- Second-half settlements up 41% on the first half
- CET1 ratio: 11.6%
- Forward-looking economic overlay lifted to $3.7m, representing 26% of the collective provision
Prudent provisioning and low arrears point to disciplined risk management, with the overlay increase reflecting what management described as a more challenging economic outlook.
Dividend lifted to 24.5 cps as payout policy maintained
The presentation confirmed a final dividend of 12.5 cps fully franked, up 1.5 cps on the FY25 final dividend, with a record date of 31 August 2026. This brought full-year dividends to 24.5 cps, an increase of 3.0 cps.
The full-year payout ratio was 71.5% on an underlying NPAT basis, sitting within the group’s 60–80% target policy. The dividend reinvestment plan (DRP) will be activated at a discount of 1.5% for the final dividend.
Based on a closing share price of $4.70 at 24 August 2026 and a market capitalisation of approximately $801m, the group noted it was trading on a fully franked dividend yield of around 5.0%, reinforcing its income appeal and track record of fully franked dividends.
The investment case and what comes next
Management outlined that FY26 demonstrates the merger thesis is delivering, with earnings grown, execution on track and the next phase of value creation described as visible.
Management commentary
Management outlined that FY26 validates the merger thesis, with the next leg of value creation expected to come through further synergy delivery and the continuing shift towards higher-return businesses.
The presentation set out four forward business priorities:
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Profitably grow home lending and customer deposits
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Scale the equipment finance book
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Grow funds and private trustee services businesses
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Explore inorganic opportunities that deliver shareholder value
Management framed the investment case around four pillars:
- Diversified, growing business across four lines, spanning retail banking, equipment finance, managed funds and trustee services
- Integration upside, with $11.8m of run-rate synergies delivered and a $20–25m FY28 target unchanged
- Improved earnings mix, with 11.3% of NPAT now from higher-return businesses
- Capital flexibility, with 15.8% total capital to fund growth and strategic priorities
The FY26 result validates the merger thesis, and management pointed to synergy delivery and the ongoing earnings mix shift as the visible drivers of the next leg of value creation.
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