Australia’s largest member-owned financial services provider CUA, posted an annual consolidated Net Profit after Tax (NPAT) of $51.66 million, up 5.8 per cent on last year’s result. The result was driven by member growth, up 7,935, taking total members to 439,713 across the banking and health insurance businesses, as well as strong growth in net interest income. Consolidated assets grew 7.6 per cent for the year to a record $12.90 billion. Their “Life rich banking” strategy appears to be working.
Capital adequacy and return on assets (ROA) remained steady against the previous corresponding period, while CUA’s return on equity (ROE) improved to 6.25 per cent.
Moody’s assigned a new A3 issuer rating to CUA in July 2015 and recently affirmed this rating in its review of operating conditions for the banking sector – this is the highest rating available to mutuals. This is a second rating for CUA, in addition to its BBB+ rating through S&P.
CUA’s banking business (or ADI) posted a full-year NPAT of $53.03 million, up 8.7 per cent on the previous year. The ADI results reflected strong performance across CUA’s core banking products and services, as well as commission and dividend income associated with CUA’s subsidiaries.
CUA recorded above-system home loan balance growth of 8.2 per cent amidst strong competition, soft economic conditions and regulatory restrictions. The continued high quality and low risk of CUA’s lending growth flowed through to the balance sheet, with only 6.5 per cent of CUA’s home loan portfolio having a Loan to Valuation Ratio (LVR) above 90 per cent.
While home loans remained the key driver of balance growth, the volume of personal loans issued during FY16 increased 14.7 per cent on the previous year to $186.1 million. Loans under management increased by $802.44 million, or 7.7 per cent, for the year.
Retail deposits up 7.1 per cent for the year to a record $8.33 billion.
The strong earnings result was driven by higher net interest income, up 10.3 per cent to $232.77 million and reflecting higher interest revenue from record lending in the previous year.
CUA Health posted a full-year NPAT of $1.08 million and continued to achieve strong growth in new customers. A total of 8,618 new policies were taken out during the year and 80,278 people were insured with CUA Health as at 30 June, up 9.7 per cent on the previous year. Whilst premium revenue rose 15.8 per cent to $135.76 million, the insurer returned almost 20 per cent more in benefits to policy-holders, at a total $122.96 million. Policy holders received around 89 cents in the dollar in benefits, higher than the industry average.
Credicorp Insurance posted a full-year NPAT of $1.15 million, an increase of $0.57 million on the previous year. This subsidiary now provides general insurance to 14,200 members.
CUA Chief Executive Officer Rob Goudswaard said “This result provides a strong platform to continue investing in communities, digital and member-facing initiatives to ensure CUA remains relevant to members’ changing needs, particularly during key life changes.”
“As a mutual, our members can be confident that all CUA investments are aimed at providing a better member experience and building stronger communities. That approach underpins our new Mutual Good community strategy, with increased funding to be directed to both new and existing CUA community initiatives.”
Under the Mutual Good strategy approved by the Board, CUA has started working towards increasing community investment to up to 3 per cent of NPBTC.
“We’ve also invested in an improved member experience this year, launching our first on-balance sheet CUA credit card, progressing the first phase of our streamlined loans application system and upgrades to mobile and online banking. We’re also making it easier for new members joining CUA to open a transaction account online in a few simple steps.”
Competition was another key focus for CUA and Mr Goudswaard said CUA would seek to continue working with government and industry groups to secure a competitive financial services landscape to benefit members and consumers more broadly. He hoped to see progress on implementing the recommendations from the Financial System Inquiry and the Senate Inquiry into co-operative, mutual and member-owned firms.
Mr Goudswaard said CUA’s focus on member-centric digital initiatives – including the new mobile banking app launched in August 2015 and a new CUA website in early 2016 – had driven increased use of CUA’s digital channels.
“We’re now exceeding 3 million logins and more than 1.5 million transactions using our digital channels each month – double the number of ATM transactions in a month. CUA now has more than 170,000 members using online or mobile banking and our mobile banking app has 15,500 more users than a year ago.”
