Mutuals record renewed growth in 2021

The combined operating profit of mutual banks, building societies and credit unions in Australia rose 38.6 per cent in the 2021 financial year to $685 million, recovering from a fall of 16.2 per cent in the previous year.

In its annual review of the mutuals industry involving 46 firms, KPMG Australia found that 78 per cent remained confident about their growth prospects over the next three years, up from 63 per cent in 2020.

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“The 2021 financial year was a test of resilience for business, communities and individuals, and the results of the mutuals tell a story of purposeful growth in turbulent conditions,” said KPMG national sector leader, mutuals, Hessel Verbeek.

“The mutuals have felt the ongoing impact of the COVID-19 pandemic, however the high growth in the Australian residential housing market in combination with the strong balance sheet position of the mutual sector has boosted mortgage lending performance.”

Total assets for the mutuals increased 7.4 per cent during the financial year to $148.2 billion.

Residential lending for the sector rose by 5.5 per cent to $105.7 billion while deposits grew 8.1 per cent to $117.2 billion.

Sixty-one per cent of mutuals surveyed by KPMG said that maintaining profitable and sustainable growth was one of their top priorities for the next three years, while 49 per cent ranked the low interest rate environment as the number one risk to their organisation.

The big four banks were considered one of the top three competitors to mutuals by 43.9 per cent of respondents and 39 per cent identified other banks.

Earlier this month, KPMG and PwC found that the major banks had reported a combined cash profit of $26.8 billion for the FY21, a rise of more than 50 per cent.

Mutuals spent $274.6 million on technology during the year, a 18.2 per cent increase on the previous year, with major investments in cyber security, digitisation and meeting new regulatory requirements.

“The mutuals in Australia have a great legacy as a collective, but face a number of strategic and financial challenges including stiff competition, the rapid evolution of customer expectations, low interest margins, and high costs of operation and regulatory compliance,” said Mr Verbeek.

“How you grow matters, and the mutuals are seeking to address these challenges head-on as they continue to evolve and leave a positive impact for their members and the wider society.”