MyState completes $755m merger with Auswide, creating regional banking powerhouse

Tasmania’s biggest bank, MyState (ASX: MYS), has officially completed its $755 million merger with Queensland’s Auswide Bank, creating a stronger and larger financial services institution for around 272,000 regional customers.

The merged group will operate under four brands — MyState Bank, Auswide Bank, SelfCo and TPT Wealth — and will distribute a suite of products, including investment and trustee services, through approved broker networks.

It will retain a pro forma loan book of $12.5 billion and total deposits of $9.6b across 23 branches, offering mobile and internet banking and two Australian-based call centres.

Merger terms

Under the terms announced in August, Auswide shareholders received 1.112 new MyState shares per Auswide share, implying 65.9% pro forma ownership of the combined group for existing MyState shareholders.

The parties expect the merger to deliver pre-tax cost synergies of up to $25m per annum by the end of the 2027 financial year and earnings per share accretion on a post-synergies run rate basis from next year.

The operational integration is scheduled for completion by 2028, at which point the business is expected to have realised the ongoing benefits of the merger.

Auswide is now an indirect wholly owned subsidiary of MyState and will be delisted from the Australian Securities Exchange, effective immediately.

Long-term benefits

MyState chief executive officer Brett Morgan said the merger would deliver significant long-term benefits for shareholders.

“This merger will significantly enhance the scale of our group and increase our funding flexibility,” he said.

“We will be in a great position to invest and to provide Australians with a real alternative for their banking, asset finance and wealth needs [and] look forward to growing into a stronger and larger regional bank with a more diverse customer and geographic footprint.”

Challenging environment

MyState has also announced a solid underlying net profit of $17.5m for the first half of the 2025 financial year, strengthening its capital position in a challenging environment.

Operating costs (excluding merger expenses) increased by $2.9m (or 5.8%) on the previous corresponding period (pcp).

Higher salaries and variable-based remuneration resulted in a 6.9% increase in personnel costs.

While improved marketing efficiencies supported a $600,000 reduction in marketing spend, investments in cyber risk initiatives, a new mobile and internet banking platform, along with other regulatory and compliance projects, increased technology costs by $2.4m.

Increased deposits

MyState’s customer deposits increased by 2.2% on the pcp to $6.1b, while home lending was up 0.3% to $8b.

“Our lending book was largely stable during the period and our customers continued to show resilience in the face of cost-of-living pressures, reflected in our arrears rates, which remain below the industry average,” Mr Morgan said.

“Our capital position strengthened, with the total capital ratio increasing to 17%, which is a strong position that provides us with capacity for future investment and growth.”