People's Choice sees 'a critical point' for mutual

The mutual banking sector "which has long been an important part of Australia's financial system, is at a critical point," John Cossons, chair of People's Choice Credit Union wrote in the Adelaide mutual's annual report.

"We have seen considerable changes over the past few years, such as the advent of mutual banks," Cossons wrote in a commentary co-authored with his chief executive, Peter Evers.

"The sector's five per cent market share has deteriorated as the major banks have enjoyed a significant boost to their competitive position since the global financial crisis thanks to Government supported legislation and regulatory bias," they contended.

"Despite this, our sector has the opportunity, and the responsibility to ourselves and our members, to grow in relevance to become the genuine alternative to the big four banks with a thriving and sustainable business model."

Echoing a theme in other mutual annual reports this year, they said the Customer Owned Banking Organisation had "begun working with its member organisations to develop a compelling strategic vision for our sector with a roadmap for growth, as a collaborative, forward-looking approach to improving the sector's relevance, market share and growth prospects.

"Through this work, our sector will develop key areas for differentiation, sector capacity and collaboration, and set targets and benchmarks for performance," Cossons and Evers said.

They said this strategic vision would be launched during the first half of 2014/15, "then progressed and promoted through the coming years."

People's Choice returned a net profit this year of A$25.5 million, 12 per cent down on 2013.

This represented "a solid result during a period of lower-than-expected economic activity," Cossons and Evers said.

Impairment losses almost doubled to $4.5 million, explaining most of the profit drop.

"Prudent cost management and careful investment in our strategic priorities have helped us maintain our profitability while positioning us well for the future," the two said.

People's Choice ended the 2013/14 financial year with assets of $5.9 billion, up only one per cent in a year. It has another $802 million of third party loans under management and more than $1.2 billion in funds under advice.