CUA sees profit decline as loan settlements dwindle

by Adam Smith14 Mar 2012

Shrinking loan settlements have seen CUA report a drop in profits.

The credit union has announced its half-yearly results, reporting a 5.5% decline in net profit after tax of $24.6m. The company's underlying NPAT, however, rose 10.9% on the back of strong deposits, higher interest revenue and an increase in assets under management.

But CUA also saw a rise in expenses with investment in a new core banking system. New loan settlements also fell, declining by more than a third over the half-yearly period. Settlements were down $701m, a result CUA blamed on "a downturn in consumer confidence and softer-than-expected economic conditions".

CUA chief Chris Whitehead tipped flat profit growth over the medium term, saying the mutual was "in a phase of investment and consolidation".

"CUA is in a fortunate position however, as our customer-owned business model allows us the flexibility to make capital expenditure decisions for the long term benefit of the business and our customers," Whitehead said.

The company has this year made a return to the broker market, distributing via Mortgage Choice and Smartline.  Group general manager Darrin Northey also told Australian BrokerNews that the mutual could expand beyond the franchises to wider broker distribution in the future.

"We will continue to look at the different opportunities available. We are keen to get this bedded down and provide the right service and look after those broker channels, and over time we will look at other opportunities to expand," he said.

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