Mutuals survive GFC “better than most”, says KPMG Survey
17 November 2009
Australian credit unions and building societies have survived the financial crisis “better than most”, says KPMG in its Financial Institutions Performance Survey for Building Societies and Credit Unions, released today.
Abacus – Australian Mutuals, the industry body for credit unions and mutual building societies, welcomed KPMG’s survey and the recognition of the mutual sector’s strong performance.
“At a time when consumers are hungry for competition in banking, the mutual sector – credit unions and mutual building societies – continues to deliver real choice,” said Louise Petschler, CEO of Abacus.
While the major banks have increased their market share this has been at the expense of regional banks and non-deposit taking institutions – not mutuals. KPMG’s survey shows that credit unions and building societies have maintained and grown their presence in the market.
As well as growing their balance sheets in 2008-09, mutuals recorded exceptionally high credit quality, much better than the major banks. KPMG’s survey shows that bad debt expense for credit unions is almost 5 times lower than that of the major banks – and building societies’ bad debt expense is 15 times lower than that of the majors.
KPMG also noted that the asset growth of over 7% achieved by credit unions compares favourably to the 6.3 per cent growth in total assets achieved by the major banks in 2009. KPMG’s survey highlights robust capital levels for the mutual sector and success in containing costs, an important focus for mutuals.
While profit growth was lower than previous years due to tighter interest margins, KPMG’s report notes the sector’s results reflect “the strength of their underlying business and their limited direct exposure to troubled corporates and global markets”.
“The KPMG survey confirms that we are strong, financially prudent and responsible lenders serving over 4.5 million Australians,” said Ms Petschler.
“Unlike banks, mutuals don’t pay dividends to external shareholders and profits are invested in members and their communities. Outstanding member service and competitive rates are how we put our members first,” said Ms Petschler.
KPMG’s report notes a positive outlook for the sector, with important strategic issues around consolidation, compliance costs, diversifying funding and likely reforms to the Government deposit guarantee. KPMG notes that building societies and credit unions have overcome similar structural changes in the past, suggesting they are well placed to overcome such challenges.
For a copy of KPMG’s survey, go to www.kpmg.com.au
For more information, please contact:
Pamela Eldridge
Senior Adviser – Media
(02) 8299 9024; 0423 843 790
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