rogerb, page-7

I agree... clearly they sold off Cuscal to keep their dividend payout running which is what is driving their shareprice and keeping it reasonable. They will be caught under the APRA restrictions on investor lending, something that has no doubt blown out with their push to lend through the broker market in NSW and VIC. The higher resi capital charges at the Big 4 will help level the competitive landscape, but with less than 1% market share this isn't going to be meaningful to MYS. My bet is they are hoping to either be bought out or merge with a bigger player. My bet for this is ME Bank - expect to see ME take over or take a major share in MYS. Both of them are total laggards and alsorans in the mortgage market, being crushed competitiely by the first and even second tier players. There is no space in the market for banks like Mystate. They have no market share, no pricing power, poor risk management systems, tiny scale, poor IT and infrastructure.

Sure it may be a decent play for a cash yield at the moment but they are a very short term proposition. Their new CEO has sacked all the old staff who did the heavy lifting (e.g. moving to a bank from a building society, buying the wealth management business). The new CEO has hired his old laggard mates for cushy jobs down in Hobart.

All they will do now is chase the scraps of the broker market that the big banks won't touch. They will compete on price (and therefore gouge their own margins) and risk (they will write the loans the others won't).

It may sound OK while the housing market is bubbling along but they will be the first to go to the wall when the cycle turns and all those poorly priced, poorly written loans come out of the woodwork. Until then, they will keep stripping out their capital base and IT spend to keep their dividend payout up. The CEO has zero vision, there is zero strategy, and they are a bank clutching onto their poor ratings.