People's Choice Full Year Results 2019-20

2019/20 financial highlights

• Comparative net profit before tax of $53.987 million (up 12.2%)
• Statutory net profit after tax of $22.211 million (up 5.35%)
• Member loans and advances of $7.896 billion (up 2.88%)
• Residential lending increased 3.93% to $7.418 billion
• Member retail deposits of $6.618 billion (up 6.39%)
• Total assets increased by 7.23% to $9.447 billion
• 16,939 new members (5,699 net)

People’s Choice Credit Union’s comparative net profit before tax grew by 12.2% in 2019/20, principally due to an improvement in net interest margin on the back of solid loan growth during the year (refer comparison table below).

The 5.4% improvement in statutory net profit to $22.2 million was also pleasing when taking into account the additional $9 million expense relating to technology transformation when compared to the prior year.

COVID-19-related costs of $7.18 million were incurred during the reporting period relating to increased credit provisioning, staffing needs and regulatory requirements.

In a challenging period, People’s Choice recorded an increase in residential lending of 3.93% (1.5 times the industry average) to $7.418 billion. This resulted in total member loans and advances reaching $7.896 billion, a rise of 2.88%.

At the same time, total member deposits rose by 6.39% to $6.618 billion, and the organisation’s total assets increased to $9.447 billion, up 7.23% across the year.

People’s Choice also welcomed 16,939 new members – a net gain of 5,699.

“I think everyone at People’s Choice can be extremely proud that 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,” Chief Executive Officer Steve Laidlaw said.

“We are member-owned and our members are always our central focus, especially in difficult times, and that is what makes us truly different to the big banks,” he said.

“Since the onset of COVID-19 we have provided hardship assistance to almost 3,000 members. When our phone and online inquiries doubled almost overnight we put additional resources into our National Contact Centre to ensure member calls were answered promptly. Our Financial Planning team also increased their workload by approximately 50% to support clients, and our branch and mobile staff maintained services with absolute professionalism and dedication,” he said.

This complete focus on member support was further highlighted by the investment of $43.1 million ($15.6 million opex and $27.5 million capex) across the financial year to further progress improvements in technology and enhance the total member experience.

“That was not something we were willing to delay,” Mr Laidlaw said.

“We are making excellent progress in transforming our technology and operating model to support many members’ expectations of being able to do all their banking digitally if they wish,” he said.

Despite a year which saw increased competition, and with record low interest rates adding further pressure to margins, People’s Choice has maintained its position as one of Australia’s largest and most trusted customer-owned financial institutions.

During 2019/20 the organisation’s net promoter score, which measures members’ trust and loyalty, was +39, some 37 points above the industry average. This is calculated by DBM Consultants via ongoing member surveys of numerous financial institutions.

People’s Choice was named Australia’s most reputable credit union at the Australian Financial Awards and was found to have the most satisfied home loan customers by Canstar, Australia’s largest financial comparison website.
Staff engagement and support.

Across the second half of the financial year, People’s Choice sustained operations with more than 80% of head office and mobile staff working from home, supported by a number of wellbeing programs.

This relocation occurred within a matter of days, with minimal disruption to normal services, reflecting the organisation’s technical flexibility, strong leadership and excellent culture. Throughout this difficult period staff have maintained high levels of engagement and resilience.

“Our staff members are the key ingredient in our success as an organisation and they deserve enormous credit for the commitment and dedication they have shown throughout the year,” Mr Laidlaw said.

Other highlights from the 2019/20 financial year included:

• People’s Choice was approved as a lender for the Australian Government’s First Home Loan Deposit Scheme.
• Canstar named People’s Choice the best customer-owned lender for first homebuyers in South Australia, Victoria and the Northern Territory – for the fourth consecutive year.
• $650 million in wholesale funding was settled through the Light Trust 2019-1 transaction.
• People’s Choice continued its significant commitment to assisting the wider community, this year generating $3.1 million through its Community Lottery and other programs.
• In total, People’s Choice contributed 5.4% of its pre-tax profit to corporate community investment. This was seven times the average of 0.79% average for major Australian and New Zealand companies (source: LBG Australia).

Interviews with Steve Laidlaw available by appointment.