Australian banks, credit unions and building societies have posted strong performances in 2007, according to surveys conducted by KPMG.
Latest figures from KPMG’s Financial Institutions’ Performance Survey 2007 reveal that the profits of building societies and credit unions grew by 14.3 per cent and 16.4 per cent respectively in 2007 as a result of continued asset growth coupled with ongoing cost control.
The survey also reported a 15.7 per cent asset growth for building societies and 11.6 per cent for credit unions.
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Deposit growth for building societies reached 11 per cent and 6.9 per cent for credit unions.
“[The KPMG] survey report demonstrates that credit unions and building societies are a strong force in the market with strong growth in assets, deposits and profits, and high asset quality,” said Adrian Lovney, chief executive officer of Abacus, the chief industry body for mutuals.
But the report also highlighted that the sector’s growth is not being matched by systems growth – leading to a slide in market share as well as some consolidation in the sector.
“We’re now seeing M&A activity across the sector, in particular Bank of Queensland’s friendly takeover of Pioneer Permanent Building Society in November 2006 and its more recent proposed merger with Home Building Society and offer for Mackay Permanent,” said KPMG financial services partner, Martin McGrath.
Following the profit growth in the mutuals sector, Australia’s major banks have also posted record profits largely off the back of a strong economy and the flow on benefits from investment initiatives over recent years, according to KPMG’s 2007 survey of major Australian banks.
The banks have shrugged off credit issues arising from the US sub-prime market to report a 10.7 per cent profit increase to $17.9 billion in 2007.
Underlying results disclosed as cash earnings grew by 13.5 per cent.
KPMG banking partner Michelle Hinchliffe said the banks had not been significantly exposed to the sub-prime fallout due to “more prudent lending policies”.
“While there has been a slight increase in the level of loan losses these are still at historically low levels,” she said.
