BSB 805 050

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BSB 805 050

Strong year of growth for People’s Choice Credit Union

11 Sep2017

 2016/17 financial highlights

  • Net profit after tax of $33.08 million.
  • Member retail deposits increased by 9.6% to $5.41 billion.
  • Loan balances increased by 6.4% to $6.87 billion.
  • Total assets under management and advice increased by 3.5% to $10.0 billion.
  • Strong member growth continued, with 21,587 new members joining and
    net member growth of 7,937 members.

Australia’s second-largest credit union has today announced a strong year of portfolio growth and one of its strongest years of net member growth, reflecting levels of customer satisfaction, trust and advocacy that lead the banking sector.

People’s Choice’s net profit after tax of $33.08 million demonstrates the credit union’s continued ability to generate revenue and manage costs carefully in an environment of sustained low interest rates and economic volatility. The $2.87 million reduction in net profit after tax in 2016/17 compared to the previous year reflects People’s Choice’s commitment to fair and competitive pricing and prudent investment to improve products, services and technology for members.

During 2016/17, People’s Choice continued to provide very competitive interest rates on both loan and deposit products to support members’ financial goals. This resulted in overall net interest margin percentage reducing over the year, providing $11.4 million in interest benefits back to members. Part of this decline was due to the ongoing shift of members’ lending products to lower rate package products; a trend seen over recent years. The transition to lower rate package products is largely completed and, as a consequence, interest rate margins are expected to stabilise in 2017/18.

Member retail deposits increased by 9.6% to $5.41 billion, which was well above the national market performance. Total member loans grew by 6.4% to $6.87 billion, with residential loan balances increasing by 7.6%.

“People’s Choice performed well in a challenging environment in 2016/17, delivering strong results while laying the foundations to ensure our long-term sustainability for our members,” said Chief Executive Officer, Steve Laidlaw.

“Our determination to improve member experience has resulted in People’s Choice’s strongest net member growth for years,” Mr Laidlaw said.

People’s Choice welcomed 21,587 new members during 2016/17 and increased net membership by 7,937 members.

“This growth reflects our members’ very high levels of trust and willingness to recommend People’s Choice – a stark contrast to Australians’ loss of confidence in the major banks due to their poor conduct and prioritisation of shareholder returns over customer service,” Mr Laidlaw said.

People’s Choice received further recognition for trust, service and member satisfaction during the year, winning the Roy Morgan Building Society/Credit Union of the Year Award for Customer Satisfaction for the second time in three years, as well as Mozo awards for Highly Trusted and Staff Friendliness. These awards are based on independent surveys of members and other banking customers.

“While we are not in the business of generating large profits for shareholders like the major banks, it is important that we generate sufficient profit each year to provide capital to lend, grow and invest in improving our products and services for members,” Mr Laidlaw said.

People’s Choice ended the financial year with total assets under management of $8.291 billion and funds under advice of $1.696 billion, taking total funds under management and advice to a record $10.0 billion – a 3.5% increase on the previous financial year.

Promising progress with regulatory reform

Mr Laidlaw said that after years of calls for a more level playing field to allow the customer owned banking sector to compete more fairly with the major banks, some promising breakthroughs have been seen in 2016/17.

“We welcome the Federal Government’s Hammond Review of Reforms for Cooperatives, Mutuals and Member-Owned Firms and the Productivity Commission’s Inquiry into Competition in the Australian Financial System as positive steps towards genuine regulatory reform,” Mr Laidlaw said.

“We strongly support revisions to the capital framework to allow a mutual to issue capital as a positive step forward for the growth of the customer owned banking sector,” he said.

Other highlights from the 2016/17 financial year included:

  • The development of a new Strategic Plan 2017-2022 which charts the course for People’s Choice to evolve based on the three strategic outcomes of differentiating, enabling and growing.
  • The development of People’s Choice’s Member Experience Strategy and Member Centric Operating Model: a long-term approach to improving the many interactions members have with People’s Choice, based on detailed consultation.
  • The introduction of Android Pay, Apple Pay and Samsung Pay, keeping People’s Choice at the forefront of mobile payments innovation, and numerous improvements to People’s Choice’s banking apps and internet banking.
  • The establishment of Mutual Marketplace, a joint venture company with Credit Union Australia (CUA) for procurement and accounts payable services. Mutual Marketplace commenced operations in April 2017, allowing both credit unions to streamline operations and achieve benefits of scale.
  • The quality of People’s Choice’s products and services was recognised with the Mozo Experts’ Choice award for Discounted Car Loan and the Canstar First Home Buyer Customer Owned Institution of the Year for SA.
  • People’s Choice was the first financial institution in Australia to be accredited as a White Ribbon Workplace, joining the world’s largest male-led movement to end men’s violence against women.
  • People’s Choice contributed 2.9% of pre-tax profit to corporate community investment during 2016/17, five times the 0.56% average contribution made by major Australian and New Zealand companies (source: LBG Australia). Including funds raised through the Community Lottery and other programs, People’s Choice generated $3.1 million for the community during the year and made a difference to close to one million Australians.

 

 

 

30 June 2017
$ million

30 June 2016
$ million

Change

Profit after tax (net)

$33.080

$35.948

-7.98%

Member loans and advances

$6,865.623

$6,450.820

6.43%

Member retail deposits

$5,407.137

$4,935.666

9.55%

Total assets under management and advice

$9,986.657

$9,644.961

3.54%

“Our determination to improve member experience has resulted in People’s Choice’s strongest net member growth for years.”

- Steve Laidlaw, Chief Executive Officer

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