Good morning, ladies and gentlemen, and welcome to the 2026 Annual General Meeting of MyState Limited. My name is Vaughn Richtor, and I am the Chair of the Board. I hope you can all hear me. All okay? Good. Thank you very much. On behalf of the Board, I would like to acknowledge the traditional owners of the land on which we stand today and recognize their continuing connection to land, waters, and culture. We are on the land of the Turrbal and Jagera peoples, the traditional custodians of the land on which we gather and meet. We have people joining us from many different locations today, so I would also like to acknowledge the respective traditional owners and pay my respects to all elders, past, present, and emerging.
This year, once again, our AGM is using online technology, which allows those shareholders, proxies, and guests who are unable to join here in person to attend the meeting virtually. Shareholders and proxies have the ability to ask questions and submit votes, and I will explain how this is done shortly. If for any reason there is a break in the broadcast, please remain online and we will overcome the issue and resume as soon as possible. I note that there is a quorum of not less than 25 members present, in person or by proxy, and I therefore declare the Annual General Meeting of MyState Limited open. Present in person in Brisbane are the following board members. To my right, we have the Managing Director and Chief Executive Officer, Brett Morgan. On my left, Jacqueline Korhonen. At the far right, we have Sibylle Krieger.
On the far left, Warren Lee. Next to Warren is Andrea Waters. Also here present in person representing our external audit firm, Ernst & Young, is Partner Mr. Nathan Young. We have apologies from Brian and Wendy Faulkner, and Fleur, Lily, and Edward Faulkner. The notice of meeting governing this meeting was distributed in accordance with the Corporations Act and also published on the ASX and MYS websites. In accordance with our usual practice, it has been determined to take the notice of meeting as read. Before we commence the presentations and items of business, I would like to take a moment to provide a quick explanation of how voting and questions will be managed during the meeting. Voting. In accordance with the company's constitution, Section 43, it has been determined that voting on all business before today's meetings will be conducted by poll, which will be open shortly.
Christina Piccolo from Computershare Investor Services has been appointed the Returning Officer. Proxies which have been lodged by shareholders prior to the proxy submission deadline of 48 hours before the meeting will be displayed on the screen for each item of business and will be incorporated in the poll on each resolution. Any undirected proxy votes given to the Chair will be voted in favor of the relevant resolutions. You can cast your vote on any resolution at any time during the meeting, until the poll is declared closed. You can also change your vote on any resolution during the meeting, regardless of whether your vote was initially cast at this meeting or cast before the meeting. Time will be provided at the end of the meeting to finalize votes before the poll is closed.
To cast your vote, click the Vote icon, which is highlighted on the screen, once the poll is formally opened. When you click on the Vote icon, the resolutions will be displayed. Simply select your choice of For, Against, or Abstain for each resolution. There is no need to submit your vote, as the system will automatically update. For those voting shareholders who are physically in the room with me today, you would have received a voting card upon registration. Please either scan the QR code with your mobile device and vote electronically, or complete the reverse of the voting card. Should you require assistance to do this, we have Computershare staff here available to assist you. When the poll is closed, your final selection will be recorded. The questions process.
Questions on this meeting's business may be asked during the meeting in writing or verbally and will be addressed during the relevant item of business to which they relate. Please note, questions of a personal or political nature are not appropriate to be discussed during this meeting. At each item of business, I will respond to questions from the floor first, and then address written and verbal questions from the meeting platform. Please note that written questions may be submitted through the meeting platform at any time during the meeting, and we encourage early submission of questions. I will shortly explain how to ask questions through the meeting platform. Depending on the volume of questions raised during the meeting, we may not be able to answer each question individually. However, time will be allocated also prior to the poll being closed to answer any late questions that are raised.
Written questions. To ask a question in writing on the meeting platform, select the Q&A icon, then select the topic your question relates to. Type your question into the chat box at the bottom of the screen and press Send. To help facilitate the orderly running of the meeting, if you have a written question, we encourage you to lodge it now. There is no need to wait until the particular item of business is being considered to lodge a written question. For verbal questions, for those online shareholders who wish to verbally ask a question, an audio questions facility is available. To use this service, please pause the broadcast on the meeting platform and dial in via a phone, using the dial-in number as displayed under the broadcast window. You will be granted access where you will listen to the meeting until you are introduced to ask your question.
Opening of the poll, I now declare the poll open for all resolutions. You may now cast your votes by selecting the vote icon. It is now my pleasure to present my Chair's address for the year. Financial year 2026 was an important year for MyState. It was a year of delivery. The Board is pleased to have overseen a period of solid operating and financial performance across the group. Following completion of the merger last year, our focus shifted to the disciplined execution of our integration program and realizing strategic and financial benefits of operating at a greater scale. We have been encouraged by the pace and the quality of progress achieved during the year. The Board has maintained a strong focus on governance, prudent risk management, and clear oversight of delivery throughout this period of very significant change.
In the context of the integration, a key milestone was the transition to a single banking license on the 1st of December 2025. Together, with the continued simplification of our systems and operations, this has reduced complexity and delivered early operational, funding, and capital benefits. During the year, the group delivered $11.8 million in run rate synergies, supporting our confidence in achieving the targeted $ 20 million-$ 25 million in synergies by the end of financial year 2028. The board continues to closely oversee the risks associated with integration as the group moves towards its end-state operating model, including the implementation of a single core banking system. Turning to our financial performance, we saw underlying NPAT increase by 41.2% to $58.3 million. Statutory NPAT was $56.2 million, an increase of 58% on the prior year.
Underlying earnings per share also increased by 11.7% to $ 0.343, while the group's cost to income ratio improved to 66.5%. These results reflect the increased scale of the group, growth across our key business lines, and the early benefits of integration. They also, importantly, reflect an improving earnings mix. Our higher returning businesses, including Selfco and TPT Wealth, increased their contribution to over 11% of group profit, compared with 6% in financial year 2025. This diversification strengthens the quality and sustainability of our earnings over time. MyState also remains well capitalized with common equity tier one capital of 11.6% and a total capital ratio of 15.8% at the 30th of June. Our home loan portfolio remains of high quality. Conservative lending standards and a disciplined approach to credit supported a reduction in 90 day arrears to 0.32%, down from 0.44% a year earlier.
The board declared fully franked dividends totaling $ 0.245 per share for financial year 2026, representing a payout ratio of 74.1%, within our stated target range of 60%-80%. Importantly, MyState delivered total shareholder return, including dividends, of 14.3% over the financial year, more than double the 6.2% return of the broader ASX 300 index. These achievements would not have been possible without the professionalism and commitment of our people. They have continued to deliver for our customers and shareholders while navigating a considerable program of organizational change. We also recognize the importance of continuing to build capability across the organization to support disciplined execution and sustainable long-term performance. If I look ahead, we see MyState as a larger, more diversified, and conservatively managed financial services group.
As we continue to grow the business, progress integration, and realize further synergies, we are well-positioned to deliver sustainable earnings growth and attractive long-term returns for our shareholders. The board remains focused on maintaining strong governance, supporting management in executing the group's strategic priorities, and maintaining a customer-first culture, appropriate capital and risk settings, and ensuring that growth is pursued with discipline. Before closing, I would like to acknowledge Sandra Birkensleigh and thank her for a decade of service to the Auswide and MyState boards. Her contribution as a non-executive director and Chair, including her role in the successful merger, is greatly appreciated. I would also like to acknowledge Sibylle Krieger, who retires at the conclusion of this meeting, having served MyState with distinction over the last 10 years. During her tenure, Sibylle chaired the Group People, Remuneration and Nominations Committee, and most recently, the Group Risk Committee.
I also thank our people for their continued commitment to our customers and our communities. On behalf of the board, I thank you, our shareholders, for your continued confidence and support. We have made strong progress, and I am confident that we will capture the opportunities in the years ahead. Thank you.
Thanks, Vaughn. Good morning, everyone. FY 2026 was a transformational year for the group. While FY 2025 was about bringing Auswide and MyState together, FY 2026 was about delivering the opportunity the merger created. We focused on executing three key priorities. Number one, growing our businesses. Next, progressing the integration to deliver merger synergies. Finally, increasing the contribution from our high-returning businesses. I am pleased to report that we made measurable progress across all three.
As the Chair highlighted, we delivered strong earnings growth, improved our operating leverage and earnings mix, and realized meaningful synergies, while maintaining a strong capital position and increasing dividends. Following the move to a single banking license in December 2025, retail banking momentum significantly improved. Home lending application volumes increased, settlements strengthened, and we continued investing in customer experience and distribution capability. Our home loan portfolio increased nearly 6% over the year to $13.6 billion.
We also broadened our deposit offering during the year through the launch of the Hello Saver account, helping us strengthen our deposit franchise and attract new customers. Our deposit book grew 4% on the prior year to $10.6 billion, and customer deposits made up 70% of our total funding. Selfco, our higher margin equipment finance business, continued to grow strongly with the loan book up 134%. The business contributed $ 3.9 million, or nearly 7% of the group's underlying NPAT. Our TPT Wealth business continued to provide income diversification, with managed funds remaining steady and trustee services funds under management under administration, increasing nearly 18% to $ 560 million, reflecting the success of our investment in a new trust business line. Our high-returning businesses, Selfco and TPT Wealth, are making increasingly important contribution to earnings and demonstrate the benefit of a more diversified group portfolio.
The integration continues to progress well. As at 30 June 2026, the team had completed 158 integration initiatives, which delivered $11.8 billion in run rate synergies. Importantly, all key integration decisions have now been made, providing greater certainty around our path to becoming a simpler, more scalable and more efficient organization. The execution of integration initiatives is tracking to plan, including a single loan origination system, core banking platform, and retail banking brand. We also continue to optimize the operating model. We remain on track to deliver our targeted run rate synergies of $ 20 million -$ 25 million by the end of FY 2028. Serving our customers brilliantly and providing safe, secure and trusted banking and wealth services remains key priorities. We continue to invest in the digital experience, enhance cybersecurity, and fraud and scam prevention capabilities.
Pleasingly, as a larger and more geographically diverse organization, our people now have access to broader career and development opportunities. During the year, more than 100 employees progressed through promotion and role changes across the group. We continue to invest in capability across technology, data, risk, customer experience, and growth. We also remain committed to supporting the communities in which we operate. Our team across Queensland and Tasmania continue to support local communities through volunteering, grants and partnerships. When flooding affected the Bundaberg region in March this year, we proudly provided financial support, assistance, and support to the local community. In Tasmania, the MyState Foundation celebrated 25 years of helping young people reach their full potential. Summing up, the group is stronger, more diversified, and better positioned. Earnings have grown, integration is on track, the earnings mix has improved, and the next phase of value is visible.
We have a diversified source of earnings across retail banking, equipment finance, funds management, and trustee services. We've delivered $ 11.8 million of run rate synergies with the FY 2028 target unchanged. High-returning businesses contributed 11% of underlying NPAT, and our capital position gives us flexibility to invest and grow. We have a track record of profitability, an attractive fully franked dividend yield, with a strong team focused on executing a clear strategy that will deliver long-term value. Our priorities are clear. We'll continue progressing integration, including the delivery of a single loan origination platform and a single core banking platform. We'll continue growing our retail banking business profitably. We will invest further in our high-returning equipment finance, trustee services, and funds management business. To our people, thank you. While delivering a significant integration program and continuing to grow the business, we remain focused on maintaining our strong culture.
We collaborated to win, chase the better, and create a customer wow. Our people's dedication, adaptability, and commitment throughout a period of significant change have been extraordinary. Living our values, supporting our customers, and managing our risks well underpinned our FY 2026 performance. To our customers and partners, thank you for your trust and ongoing support. To our shareholders, thank you for your continued confidence in our strategy and our future. We've built strong momentum, remained disciplined in our execution, and are well-positioned to deliver further value for shareholders in the years ahead. Thank you.
Thank you, Brett. The notice of meeting invited shareholders to submit questions prior to the meeting, and a shareholder has submitted three questions concerning the board's appetite for future M&A, the potential use of acquisitions to support expansion in regional and affluent coastal New South Wales, and the role of local brands and community-based cultures in any future transactions. In response, what I would say is that the board has previously stated that it continues to consider M&A activity where it makes sense for the group and its shareholders. Decisions such as geographical location, cultural fit, branding, and other important business elements are always a consideration that are taken into account. As evidenced by the Auswide MyState merger, we have demonstrated our ability to identify, execute, and capture the benefits of mergers successfully.
Now, before we commence the formal items of business, I would like to invite questions to myself or Brett Morgan arising from our addresses, noting again that any questions of a personal nature may be addressed with us after the meeting closes. Are there any questions from the floor? No questions from the floor? Oh, yes, sir.
My question concerns corporate governance.
Yes.
Now, if I may do that.
Please.
Mr. Chairman, thank you very much for the opportunity to address the meeting today. My name is Marcus Griffin, and I am representing Kelvedon Investments here as a proxy. I have two questions concerning corporate governance, and if I may, I will ask the second question after I get a response to the first question.
Sure.
Mr. Chairman, I note in 2016, you were highlighted as one of the few bank CEOs in Australia that supported the call for the Royal Commission into the banking sector. I quote at the time in an interview that you had with ABC Business, you said that, "Are we doing the right thing at the end of the day for the consumer? Because that's the thing I think we have to focus upon." The Hayne Royal Commission found that poor culture, inadequate lending processes, and intimidatory behavior fueled by an imbalance of power often resulted in conduct below community expectations. This particularly applied in the agricultural lending sector. In February 2019, the Royal Commission recommended guidelines for lenders to adopt to manage distressed agricultural loans prior to each state either reforming or legislating farm debt mediation acts.
Can the board of MyState confirm that MyState and its subsidiaries, without exception, has adopted the recommended guidelines of the Royal Commission in regards to agricultural lending since 2019? What assurance has the board received that these have been followed in practice, either from an internal audit or an investigation by the Group Risk Committee or any other independent party?
Thanks for the question. I'll answer that one. The board is very cognizant of all the regulations and requirements out of things like the Banking Royal Commission. We're a highly regulated organization, and we do everything we can to abide by every regulation that is applicable, whether it's a national level regulation or a state-based regulation. Yes, I can confirm that we are very conscious of all requirements per the regulations and per both national and state based, and we comply with that. We have strong oversight of all regulations and our compliance with them.
Just so I'm clear that you're conscious of them, but you have applied them in every case. Is that correct?
Yeah. Whether they're national or state based.
Okay. Thank you. I'm aware of a Tasmanian customer who has raised serious concerns concerning TPT Wealth's conduct and lending practices. Also, compliance with the Banking Code of Practice and how the Royal Commission guidelines were applied to them. I understand attempts were made by this party to engage with the CEO and also with the former Chair, both of which were rejected, with the former Chair claiming and confirming the Board's satisfaction with MyState's actions, whilst MyState concurrently actioned processes to prevent the customer from gaining independent assessment of the merits of their claim.
Can I just-
Can I ask a quest, Sorry, I'm not going to comment on the case.
We don't address matters of a personal nature, as I've said.
I appreciate it. I'm not asking you to comment about the case or the customer, more so the basis of process. In this case, when disputes like this go unresolved and are subsequently exposed to a broader audience, management and board bear the regulatory and reputational risk, and shareholders bear the financial risk. Will the board commit to an independent review of how escalated customer disputes have been handled, and in this case, meet the farming family concerned before this matter is presented to a broader court of public opinion?
I'll start with the operational nature and maybe hand to Vaughn to talk about more governance. We understand the environment that we operate in, and we understand interest rates going up, and we understand cost of living pressures are in place. Whenever a borrower is suffering some challenges or hardships, we engage with those borrowers at an organizational level, whether they're the manager involved or our hardship team or whoever that might be, and we work with those borrowers to try and get the best outcome possible. So we explore all the avenues that are possible for us and we think appropriate, and then hopefully, in most cases, we work through that and the borrower's able to start repaying and maintaining their property. In some cases, that's not the case.
Operationally, we do everything we can, that we believe is plausible and possible when the borrower's delivering on their commitments to work with them and see that through. So that's operationally how we do it and we have a hardship team, and if people call in, they can talk to people, and we work with them, defer payments. We do all sorts of different things just to try and help them. So that's operationally. I might hand over to Vaughn from a corporate governance perspective.
The board has in place processes that already cover this, and of course, borrowers always have external, independent organization refer, like AFCA. We won't discuss individual cases, as I've said earlier. Are there any other questions? Are there any written questions from the meeting platform? There are no questions, I'm advised, from the meeting platform. Okay. Now we'll move to the formal items of business, and we will address any questions in respect of each item which have been submitted during the meeting. The first item of business is to receive and consider the financial statements and reports, and no resolution is required on this item. The directors have prepared and approved the financial statements included in your 2026 annual report. The auditor's report is unqualified.
Questions are now invited relating to the annual accounts, the directors' statement, and reports about the conduct of the audit and preparation and content of the auditor's report. Questions may be directed to the company or the external auditor, Mr. Nathan Young. Are there any questions from the floor? Are there any written questions from the meeting platform? Are there any verbal questions from the meeting platform? No? Okay. Item number two, re-election of Warren Lee. Item two is for the meeting to consider, and if thought fit, pass the following ordinary resolution, that Warren Lee, who retires from the office of director in accordance with clause 62 of the company's constitution and ASX Listing Rule 14.4, being eligible and offering himself for re-election, be re-elected as a director of the company.
I note that the board, in the absence of Mr. Lee, has voted unanimously to endorse Mr. Lee's re-election. I will now pass to Mr. Lee and ask him to present to the meeting.
Thank you, Vaughn. Good morning, shareholders, and thank you for being involved in this year's AGM. My name is Warren Lee, and I was appointed to the MyState board in October 2017, and I'm up for re-election, as Vaughn just said, at this meeting. I'm a chartered accountant and had an extensive executive career in financial services in Australia and Asia, including two CEO roles. I currently have two other directorships, being MetLife Limited, the Australian business of the global insurer MetLife, and I chair Warakirri Asset Management, which is an asset manager with a focus on agriculture as well as traditional asset classes. In addition to my position as a non-executive director on the MyState board, I'm also a member of the audit committee, the risk committee, and I chair TPT Wealth.
The MyState Bank business has grown and developed significantly over the last nine years, with our digital strategy delivering better outcomes for our customers, and I fully support future growth initiatives. In our wealth business, we see clear growth paths across our trustee, funds, lending, and compensation business lines. This will continue to drive increasing returns. Brett and the executive are continuing to perform strongly, and this delivers value for you, our shareholders, and our other stakeholders. Well done to the team on being on track to deliver the forecast merger synergies. I am very pleased to be involved with MyState and look forward to working with the other board members and the executive as the MyState business continues to grow and deliver increasing returns. Thank you for your attention and for your support. Thank you.
Thank you, Warren. Are there any questions for Warren from the floor? No questions from the floor. Are there any written questions from the meeting platform? Thank you. No questions. Any verbal questions from the meeting platform? No. The proxy votes received prior to the meeting will now be displayed on the screen. Thank you. Let us now move to item three, which is the re-election of Andrea Waters. Item three is for the meeting to consider, and if thought fit, pass the following ordinary resolution: That Andrea Waters, who retires from the office of director in accordance with Clause 62 of the company's constitution and ASX Listing Rule 14.4, being eligible and offering herself for re-election, be re-elected as a director of the company. I note that the board, in the absence of Mrs. Waters, has voted unanimously to endorse Mrs. Waters' re-election.
I will now ask Mrs. Waters to present to the meeting.
Thank you, Vaughn, and good morning, fellow shareholders. It has been a pleasure to be able to serve you as a director since I joined the board in October of 2017. I am passionate about the role that regional and smaller banks play in providing an alternative to the Big Four banks, and that is why I joined the MyState board. I have over 40 years' experience in the financial services sector and over 20 years' experience as a non-executive director.
My background as an auditor at KPMG, specializing in banking and wealth management, has enabled me to bring a depth of industry experience to my role as a director. My roles as a non-executive director on other APRA-regulated entities provides insights into the broader financial services sector. During my time on the board, I have served as chair of the Group Audit Committee and as a member of the Group Risk Committee.
I have sought to bring my experience of financial services and audit, and business more broadly, to bear on the many complex judgments and decisions we have had to make, particularly in relation to the merger with Auswide and the ensuing audit tender process. I hope that I have helped to contribute to the strong position MyState is in today, and I remain excited by the opportunities the company has for further growth and for delivery of the full merger synergies in the single core banking system. In order to support orderly succession planning on the board, shareholders are asked to support my appointment for a two year term. If I am re-elected today, I commit to continuing to serve in the interests of you, our shareholders, and of all MyState stakeholders. Thank you.
Thank you, Andrea. Are there any questions from the floor? No questions from the floor. Are there any written questions from the meeting platform? No written questions from the meeting platform. Are there any verbal questions from the meeting platform? No further questions. The proxy votes received prior to the meeting will now be displayed on the screen. Thank you. Let's move to item four, the remuneration report. Item four is to consider, and if thought fit, pass the following non-binding ordinary resolution: That for the purposes of Section 250R(2) of the Corporations Act 2001, and for all other purposes, the Remuneration Report, which forms part of the Directors' Report for the year ended 30 June 2026, be adopted. The Remuneration Report is set out in the 2026 Annual Report. The vote on this resolution is advisory only.
The relevant voting exclusions and details about the outcome of this vote are included in the notice of the meeting. Are there any questions from the floor? No questions from the floor. Are there any written questions from the meeting platform? No questions from the meeting platform. Any verbal questions from the meeting platform? No questions. The proxy votes received prior to the meeting will now be displayed on the screen. Thank you. Item five.
Item five is to consider, and if thought fit, pass the following ordinary resolution: That for the purposes of ASX Listing Rule 10.14, and for all other purposes, the issue by the company of up to 175,439 unlisted performance rights to the company's managing director and chief executive officer, Mr. Brett Morgan, as part of Mr. Morgan's remuneration for the financial year ended 30 June 2027 on the terms set out in the explanatory memorandum to this notice of AGM be approved. In accordance with the Corporations Act and ASX Listing Rule requirements, the company will disregard any votes cast in favor of this resolution by the company's key management personnel or closely related parties as described in full in the voting exclusion statement set out in the notice and explanatory memorandum for this meeting. Are there any questions from the floor? Yes.
The performance hurdles, as we said last year, are related to ROE and total shareholder return, and the ROE targets will be displayed based upon the business plans and will be reported retrospectively at the end of the three-year period. In other words, the hurdle against that. It means it is set against how the company performs relative to its business plan in terms of ROE and the relative total shareholder return over that three-year period. Happy to spend a little bit more time in detail at the end of the meeting with you, if that is okay. Yep. Are you happy with that? Thank you. Any other questions? Questions from the meeting platform, either written or verbal. We will now display the proxy votes received prior to the meeting. Thank you very much. Ladies and gentlemen, there are no further items of business for the meeting.
Before we close the poll, are there any final questions? Yes, sir. We do not give direct forward-looking statements. But as we said earlier on, what we have done in terms of the integration is to position the company well to face the challenge ahead. We have strong risk management. We have a clear strategy. We have increasing scale, and we look to make sure that we respond not just to all the challenges, but they also present opportunities to us.
And we think we are well positioned to capture that going forward. Sorry. Oh, sorry. Yes, I am sorry. I missed you. Yes. What are your thoughts about- Sorry. What are your thoughts about the franking credits? My thoughts are they are what they are. There is not a lot we can do about it. I do not have a personal view on that. We do not have a corporate view on that. Brett?
No, we have been historically paying fully franked dividends, and we have a significant amount of franking credits on the balance sheet. So, on the basis that the laws remain we can distribute those, we will continue to distribute those with dividends. But who knows?
We will continue to use them as much as we can, absolutely. And then the key idea is to make sure that from a company point of view, we continue to perform profitably and well. Any other questions from the floor? Any final questions from the meeting platform? Any final verbal questions? No verbal questions. Okay. Let us pause and finalize the voting. Somebody will come around and collect your votes.
Sorry, are you all done? I think we have collected all the votes. Okay. Now, please note that the formal results of the poll will be lodged with the ASX later today, and you can access these results by going to the ASX or the MyState Limited website. There will be no further business for this annual general meeting. I thank you all for attending today, and I declare the meeting closed. Close the meeting at 11:12 A.M. Brisbane time. No, A.M. Sorry.
I'm on Sydney time. Thank you very much. Thanks for your attendance, and thanks for your support.