Credit Union Australia (CUA) is confident it can attract more customers and boost revenues despite a slump in first half profit.
Australia’s biggest credit union on Tuesday reported an unaudited net profit of $24.6 million for the six months to December 31, down 5.5 per cent from $26 million a year earlier.
Softer consumer confidence and economic conditions cut by a third to $701 million the number of new loans settled, CUA said in a statement.
That was despite the lender cutting interest rates on its mortgages in late 2011 to maintain a 50 basis points discount on variable rate home loans to the average of the big four banks.
Chief executive Chris Whitehead said profit growth would be flat over the medium term while CUA continued to make major investments in its business, including a new banking system.
However he remained upbeat about CUA’s ability to drive earnings during the rest of the year.
“Despite current economic challenges, we are optimistic about CUA’s future and expect interest revenue, assets under management and customer numbers to continue to increase in the next half,” he said in a statement.
While CUA’s reportable net profit took a dive, its underlying profit jumped 10.9 per cent to $24 million.
Interest revenue surged 18.6 per cent, driving net interest revenue to $93.3 million.
However that was offset by a 21 per cent hike in expenses as CUA invested in a new banking system.
Assets under management rose two per cent to a record $9.01 billion, and retail deposits increased 6.2 per cent to $6.4 billion.
CUA, which as 400,000 customers, in February re-entered the third party distribution market to attract more borrowers by joining mortgage brokers Mortgage Choice and SmartLine.
The move came almost four years after CUA exited the broker channel because reduced profitability had made third party distribution no longer viable.
CUA was one of the few lenders to leave its standard variable rate unchanged in February after the major banks lifted theirs despite the RBA’s cash rate remaining steady.
