People's a choice brand in target market

The rebranding of two credit unions in South Australia as People's Choice is producing intangible, though not yet financial, benefits.

Australian Central and the Savings & Loans credit unions agreed to merge three years ago. The new entity adopted new branding last year.

Peter Evers, managing director of People's Choice, said research on "brand salience" by the University of South Australia found that the new brand ranked ahead of all other lending brands, including those of major banks, in its target markets in South Australia and the Northern Territory.

The research method links key words such as home loans to brand recall.

While the name is resonating well in the target market, the urge to borrow from the credit union is not so strong.

Loan settlements increased by just one per cent over the year, to $990 million, but total loans fell three per cent, to $5.45 billion.

"Borrowers are de-leveraging and paying back debt. If they want to pay it back we support that."

People's Choice reported a net profit of $22.2 million over the year to June 2012, a decline of one third.

Factors behind the lower profit include the absence of a one-off boost from the sale of Visa shares in 2011, the full year effect of reduced fees (introduced in March 2011) and the pressure of margins in the first half.

The credit union alleviated this latter trend in the second half by following the lead of ANZ and ending the nexus between the announcement of changes in the RBA's cash rate and changes to the pricing of variable-rate loans.