Record lending lifts mutual lender’s earnings by 8.7%

According to the member-owned financial services provider, NPAT for the banking business was up 8.7 per cent on the previous financial year, with home loan balance rising 8.2 per cent despite “strong competition” across the mortgage landscape, “soft economic conditions” and ongoing regulatory restrictions.

It said the profile of this lending growth continued to be high quality and low risk. This was reflected on its balance sheet, where only 6.5 per cent of the home loan portfolio had LVRs above 90 per cent.

While home loans remained the key growth driver, personal loans increased 14.7 per cent to $186.1 million – increasing total loans under management by $802.44 million, or 7.7 per cent.

CUA attributed the strong earnings to higher interest revenue from record lending in the previous year, resulting in net interest income increasing a full 10.3 per cent to $232.77 million.

Capital adequacy and ROA remained steady, while ROE improved to 6.25 per cent.

CUA subsidiaries also continued to post profitable results, with CUA Health posting a full-year NPAT of $1.08 million and Credicorp Insurance posting a full-year NPAT of $1.15 million, an increase of $570,000 on the previous year.

'Limited options to raise capital will continue to provide a challenge'

The chief executive officer of CUA, Rob Goudswaard, said the strong performance will allow the member-owned lender to continue its focus on growth.

“As a mutual, our members can be confident that all CUA investments are aimed at providing a better member experience and building stronger communities,” he said.

The non-bank lender has previously said that it will launch a new loan origination system later this year to “transform the customer experience with a new digital front end for online applications and a simpler end-to-end process for all our products – personal loans, home loans and credit cards”.

However, Mr Goudswaard said he expects economic conditions to “remain tough” in the year ahead.

“We will continue to face headwinds on the economic and regulatory front,” he said.

“The limited options available to mutuals to raise additional capital will continue to provide a challenge, as will the competitive environment and margin pressure in this low interest rate environment,” Mr Goudswaard added.

“Against this backdrop, CUA must continue to attract members through establishing a deeper connection to communities.”

[Related: CUA partners with fintech hub]