Australia’s second largest credit union, People’s Choice CU, has defied the earnings slide across the banking sector after posting another year of above-system growth in home lending.
The Adelaide-based mutual reported a net profit of A$22 million for the 12 months to the end of June, an improvement of more than 5 per cent on the 2019 result.
Chief executive Steve Laidlaw attributed the solid result partly to growth in the residential loan book, which expanded by almost 4 per cent to $7.4 billion.
“We have been able to maintain a very solid growth performance while providing extensive assistance and support for our members as they deal with the significant challenges brought about by COVID-19,” he said.
“We are seeing very strong growth in demand for residential loans in regional centres.”
People’s Choice incurred pandemic-related costs of more than $7 million in the June half – adding to cost pressures already apparent given the step-ups in capital expenditure to transform core banking systems and distribution channels.
Laidlaw said that that 3500 loan accounts or 8 per cent of the home loan book had been granted repayment pauses.
The percentage of borrowers requiring support is slightly less than the industry average of around 11 per cent.
“Around forty per cent of borrowers who have received support are now making repayments either in full or in part,” he said.
“We are very confident that the vast majority of those receiving support will be able to work their way through.”
Laidlaw said the credit union’s strategy of growing its loan and deposit bases outside of South Australia had not changed despite the heavy toll on the Victorian economy because of the pandemic.
“COVID-19 has reinforced the strength of South Australia, which has been a positive for us,” he said.
“But it hasn’t changed the strategy and so far it hasn’t had a big impact on our growth in Victoria.”
In the last three years People’s Choice has been expanding outside its home markets of South Australia and the Northern Territory, with a special focus on Melbourne and regional parts of Victoria.
The credit union now has seven branches in Melbourne and others located in the regional centres of Ballarat and Warrnambool.
Lending to Victorian borrowers is approaching $1 billion and now accounts for about 13 per cent of the total loan base of $8 billion.
The bottom line result was boosted by a slightly lower effective tax rate compared to the 2019 financial year.