Two ASX-Listed Non-Major Regional Banks Announce Merger

Two non-major regional banks listed on Australia Stock Exchange (ASX) in Australia – the Tasmania-based MyState Bank and Bundaberg headquartered Auswide Bank – on Monday have announced plans to merge to create a banking group with net assets of $755 million and a loan book of $12.5 billion.

The merger, which is subject to regulatory and Auswide shareholder approvals, is expected to settle in mid-to-late December 2024. In July this year, ANZ Banking Group’s $4.9 billion takeover of Suncorp’s banking division.

The Australian banking sector has been witnessing a spate of mergers in the recent past, and the latest one is expected to be earnings accretive for the group from Financial Year 2026 after MyState Bank, a diversified financial services group of MyState Ltd, reported 8.3% fall in net profit after tax to $35.3 million in Financial Year 2024.

MyState Bank said that the merger will increase its loan footprint across Tasmania, Victoria and New South Wales, while strengthening its presence in the fast-growing Queensland market. The merger is expected to deliver the group significant scale and contribute to improved operating efficiency from a larger balance sheet and increased funding flexibility.

The merged entity will have total assets of $14.4 billion, customer deposits of $9.6 billion and total operating income of $223.3 million. Auswide Bank, which was founded as Wide Bay Capricorn Building Society in 1979, largely operates in Queensland with a network of 16 branches.

Auswide Bank shareholders are being offered 1.112 new MyState shares for every Auswide share they own, which gives MyState’s existing shareholders a 65.9% pro-forma interest in the combined group.

MyState, which absorbed the Queensland-based The Rock Building Society in 2011 and closed down branches several years later, has seven branches across Tasmania. However, its customer base totals 180,000 compared with Auswide’s 92,000. MyState Bank said that there will be no change to the branch footprint following the merger.

Consistent with Growth Strategy

MyState Bank CEO Brett Morgan, who will head the merged entity, said that the combination of two high-quality and complementary businesses is consistent with our stated growth strategy and brings significant scale advantages to the group.

“We expect significant cost synergies from the merger, which we also expect to be EPS (earnings per share) accretive for MyState shareholders from FY26 on a post synergies run rate basis,” Morgan said.

Despite a fall in net profit for the year, MyState managed to boost its loan portfolio by 1.8 per cent to $8 billion as customer deposits dipped 4.9 per cent to $5.9 billion.

“MyState Limited managed the balance between growth and margin well in FY24 and our focus on extracting efficiencies and expense management delivered a reduction in operating costs in an inflationary environment,” Morgan said.

“We have maintained our focus on growing profitably while delivering on a range of important strategic initiatives including the launch of a new internet and mobile banking experience and an expanded Trustee Services offering. Along with efficiency initiatives delivered across the group which supported a reduction in total operating costs, we have set strong foundations which will help to drive profitable growth into the future,” Morgan said and added that the group has attracted more than 14,000 new bank customers in FY24.

Auswide Bank’s Managing Director and CEO Doug Snell said that the proposed merger with MyState Bank would create a bank that would span the eastern seaboard of Australia from Queensland to Tasmania.

“It would also combine the organisations’ complementary strengths and resources, providing the opportunity for future growth and enhanced customer experiences,” Snell added.