People's Choice CEO Steve Laidlaw
People’s Choice is stepping up its growth aspirations, as the Adelaide-based mutual ADI sorts through terms for a merger with the faster-growing Queensland-based Heritage Bank.
“We probably got out of the blocks slowly [early in FY2021],” CEO Steve Laidlaw told Banking Day yesterday.
“We thought Covid would have more impact.”
People’s Choice approved record mortgage settlements over the final quarter of the year to June 2021, and is one of many larger mutual banks playing the catch up game in home finance.
The bank recorded a fall in net profit of A$1.1 million to $21.1 million, a figure “well within budgeted expectations” Laidlaw, PCCU’s managing director and chair Michael Cameron wrote in the annual report released on Monday.
The year saw 14,598 new members join People’s Choice to deliver a net increase of 8,592 – taking total membership to more than 390,000.
“The refresh of our brand during the year has ensured we will keep attracting new members by remaining relevant in a highly competitive environment,” the chair and CEO chirped.
The mutual’s Net Promotor Score averaged +31 over the course of the year, 23 points above the market average of +8 for the financial institutions surveyed. The NPS is calculated by DBM Consultants.
Revving up mortgages in the June quarter took one lift from steps by People’s Choice to “expand our presence in the thriving Victorian market, by offering loans
through the independent broker network,” Laidlaw said.
“This strategy has proved to be successful, as it had previously in the Northern Territory, delivering better-than-expected results almost immediately,” he said.
Maybe. The bank ended the financial year with total assets of $9.7 billion, an increase of 2.4 per cent, which is double the sector growth rate.
People’s Choice retail deposit portfolio grew by 5.2 per cent to $7.0 billion, half the sector growth rate.
In 2020/21 “we provided 6217 loans for members to buy a house, including 2,087 for people purchasing their very first home,” the bank said.
“We helped more than 5,600 members to buy a car, enjoy a holiday or carry out renovations.”
Should plans proceed, the merger with Heritage Bank, will occur on or before 1 July 2022, and the People’s Choice cost line relates the reasons why.
Expenses puffed by 7 per cent to $222 million, with information technology costs up a hefty 54 per cent as the bank ploughs on with an upgrade to the latest variant of the Fiserv core banking system.
This investment turned the level of intangible assets on its head to $59 million from $6 million.
With effect from 28 February 2022, the Credit Union has given notice to withdraw from CUFSS, a veteran scheme to supply liquidity support among mutual ADIs.
Capital adequacy fell slightly from FY20 levels, to 13.7 per cent from 14.2 per cent, “driven by loans growth and digital transformation spend,” Laidlaw said.
“Note that we did our inaugural Tier 2 issuance last week for $75 million, and our total capital is now over 15 per cent”.