Mutuals Industry Review 2014

Mutuals Industry Review 2014

2014 was a very challenging year for the mutuals industry. Operating profit after tax has fallen by 1.5 percent continuing a 3-year trend, and increasing industry concentration is a key issue being examined by the Financial System Inquiry. Yet the industry has seen continued transformation in technology and innovation.

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Partner and National Sector Leader, Mutuals

KPMG Australia

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Glass floor looking upwards

The mutuals now have a real choice to make as a sector. Do they want to continue to operate as individual small businesses or is there an opportunity to achieve scale benefits by operating collaboratively and by facing the market with a unified value proposition?

The review provides a detailed financial analysis of the mutuals industry based on analysis of nine building societies, 10 mutual banks and 44 of the largest credit unions authorised by APRA. In addition we surveyed the industry to gain their perspectives on social media, mobile technology, regulation and risk management.

Key findings

  • The mutuals did not participate in the loan growth of 7.4 percent achieved by the major banks growing at 3 percent.
  • The mutuals did not obtain the benefits of lower wholesale funding costs with retail deposit funding (over gross loans) at 96.6 percent (top 10 only) compared to 74.7 percent for the majors.
  • Maturing fixed rate loans repriced at lower rates as interest rates remained low.
  • Cost to income ratios remained high at 78.7 percent compared with 45.9 percent for the majors.
  • Capital levels of 18.2 percent remain comfortably above minimum requirements.

Mutuals Industry Review

Banking & Capital Markets

Banking & Capital Markets

KPMG's Banking and Capital Markets practice is well placed to help clients successfully navigate challenging times and capitalise on opportunities.

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