Reportable NPAT up 16.5% to support positive FY 2011 financial results

22/09/2011

Financial highlights

• Reportable NPAT of $54.4 million, up 16.5% year-on-year
• Underlying NPAT increased to record $46.2 million
• Total assets under management increased by 14% to record $9 billion
• Retail deposits increased by 13%, from $5.3 billion to $6.1 billion
• New loans settled up 14% to $1.9 billion
• Net annual interest revenue of $173.0 million, up 10%
• Capital adequacy ratio solid at 13.3%
• Continued significant investment in people, systems and processes and products and services

Credit Union Australia Ltd (CUA), Australia’s largest customer-owned financial institution, has today announced reportable net profit after tax (NPAT) of $54.4 million for the financial year to 30 June 2011, an increase of 16.5% year-on-year (2010: $46.7 million). Its underlying NPAT has also increased to a record $46.2 million.

Deposits grew by $710 million (13%) to $6.1 billion, outperforming the system¹ rate of 7.4% by almost double, in a climate where total market household deposit growth slowed over the last quarter of the 2011 financial year to almost zero. 

CUA delivered increased net annual interest revenue of $173.0 million, an increase of 10% year-on-year, and saw an increase of 14% in new loans settled for the year to $1.9 billion (2010: $1.6 billion).

Total assets under management grew to a record $9 billion, an increase of more than $860 million since June 2010. Capital adequacy remains positive with a ratio of 13.3%. 

CUA Chief Executive Officer, Chris Whitehead, said CUA’s 2011 financial year results reinforced its strong financial position, achieved against a backdrop of rising funding costs and increased competitive pressures, particularly with respect to retail deposits. 

“Despite a challenging macro environment, CUA has maintained its commitment to bring competition to the market by investing significantly in the business to provide customer-focused products and services and offer highly attractive rates to members and customers. This re-investment underpins our strategy to set CUA up for long-term sustainable growth."

“Specifically we have increased expenditure on attracting and retaining key members of the management team, increased staff numbers across the business and implemented bespoke training programs. Considerable investment has also been made in our systems and processes to improve efficiencies, including the implementation of a new core system,” Mr Whitehead said.

“The benefits of the customer-owned model, where all profits go directly back into the business and cost-savings are passed on to customers through competitive products and services, are the foundations of our ambitions to substantially grow assets under management and to challenge the status quo of the Australian financial services landscape.”

CUA’s FY 2011 Year in Review

• Achieved an investment grade credit rating from Standard and Poor’s of BBB+ in October 2010
• Achieved a merger with Plenty Community Credit Union in October 2010
• Maintained a differential of at least 50bp on its Standard Variable Home Loan to the average of the Big Four banks since April 2010
• Awarded CANSTAR CANNEX 5 Star ratings for eight fixed rate home loan products
• Selected TCS and its world-leading TCS BaNCS banking platform to deliver new core banking system
• Achieved an Employer of Choice citation from the Equal Opportunity for Women in the Workplace Agency for the sixth consecutive year
• Enhanced digital channel: successfully launched social media strategy via Facebook and launched CUA AutoMate – an Australian-first car finance calculator and comprehensive car buying guide – available online or as a ‘mobile App’
• Winner AB+F ‘Credit Union of the Year’ for third consecutive year and finalist for ‘Australian Financial Institution of the Year’ (Non-Big Four), ‘Advertising/Marketing/ Promotional Campaign of the Year’ and ‘Best Use of Social Media of the Year’, and winner Your Mortgage Magazine ‘Credit Union of the Year’
• Actively participated in the public debate on Australian banking competition including contributing to and appearing at the Senate Economics References Committee Inquiry into ‘Competition within the Australian banking sector’

Outlook

Notwithstanding that challenging and highly competitive market conditions will prevail during FY 2012, CUA remains in a positive financial position to deliver on its growth strategy. However, whilst further investment is made in the business, relatively flat profit growth is anticipated. 

Mr Whitehead said that CUA would continue to challenge the market and reinforce the benefits of the customer-owned model in the coming financial year.
“We remain committed to delivering market-leading products coupled with excellent customer service for all our customers."

“To support our commitment, CUA will move from the design phase to full scale implementation of its core banking system over the next couple of years as the business focuses on delivering increased cost efficiencies and profitability – all of which will ultimately be passed on to benefit our customers,” Mr Whitehead concluded.

_{¹APRA's Monthly Banking Statistics on Household Deposits, June 2011. System growth in Household Deposits over FY 2011 was 7.4 per cent}