Today Banking Day features the state of play, size, performance and outlook for the credit union and mutual banking sector in Australia.
For pragmatic reasons, this study focuses on the top 30 mutual ADIs, roughly half the number of remaining institutions, as seven ADI annual reports of smaller credit unions are yet to come in.
Despite being a sector (probably) perceived as on the wane – given the many, many mergers over the years and a halving in industry returns since 2017 – overall it seems in fair health.
There are robust success stories and promising challengers in this top 30 mutual banks cohort, many with a lot of fintech flair to their offerings.
Collectively (on APRA’s aggregate data) the sector commands 2.8 per cent of the entire asset share of the banking sector – roughly the same share as Bendigo and Adelaide Bank - but this market share has fluctuated much more than the sector might want over the years.
Over the last year the sector has picked itself up once more on the asset front and by and large managed interest margins well. Indeed, NIM’s in the order of 2.2 per cent are not at all uncommon in the mutual sector, a function of the dynamics of member vale displacing shareholder value. As well as generally pretty high cost structures.
The rebooting of merger momentum and a bit of guesswork on demutualisations is our second feature.
Third, some reflections on the crazy brave, mutual bank funded dash in fintech extremism in the form of 86 400. And how Cuscal saved the industry’s bacon.
For more than 12 years Banking Day has been reading mutual ADI annual reports closely, collating data and drawing on this research in our reporting.
Today’s first instalment of the 2021 Mutual Banking Review is the fruit of even more focus this year and will serve as reference at a time when little known names in an under-researched sector will increasingly be coming into focus.
Graeme Phipps, a lesser-known member of our team, is lead researcher on this work. A statistician by training and working as a financial controller over most of his career, for Graeme and Banking Day this is a bit of a passion project.
We’ll pull together a second instalment and update the analysis in the 2021 Mutual Banking Review once all the data is to hand.