Teachers Mutual has reported mammoth growth in deposits and assets as a result of their strong base in the key worker demographic during the pandemic.
Teachers, a customer-owned bank focussed on the education sector but encompassing other essential works such as firefighters and health professionals, saw a 20.1% rise in home loan assets, as well as their deposits increase from $1.2 billion to $7.9 billion.
Teachers recently launched their own digital bank specifically for essential workers, which has resulted in a spike in deposits as well as lending.
“We’re obviously very pleased with the results,” said Steve James, CEO of Teachers Mutual. “The prior year we had abut a 2% growth in lending and last year we had 20.1%, which is 15% above system in housing loans, plus reasonable profit going forwards and 10,000 new members.”
“Part of that is the merger with the Firefighters’ credit union in Victoria, which added 3,000 members, ad we’ve got another 6,000 coming on the 1st November when we merge with Pulse credit union. We’re very happy with that – their members voted 97% in favour, which is highly successful.”
“We also grew our assets from $1.6 billion to $9.75bn, so we’ve got some scale there. We’ve had a pretty good financial year.”
Teachers and mutuals like it have been perfectly placed to take advantage of market trends in recent years: they are small enough to be agile and adapt on the tech side, while also bringing the authenticity and trust that comes from being customer-owned.
“There’s no doubt that we took advantage of that, especially during the last 12 months in the heavy Covid periods and during lockdowns,” said James.
“As interest rates dropped, we had a very competitive fixed home loan out there and now we’ve got a variable as well. That’s why we saw the uptake.”
“Members had time to sit down and think. They’re all essential services, a niche market, and they were fully employed during the whole period. They were flat out, whether firefighters during the bushfires or nurses in the hospitals or teachers, who were working from but still working.”
“They generally feel better in difficult times: we found the same thing happened in the GFC. That type of membership feels fairly comfortable during periods of stress and they’ve come out to borrow.”
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Glenn Sergeant, CFO at Teachers, added that the growth that the customer-owned bank had seen was off the back of their members having steady jobs and the ability to save and invest when the pandemic hit.
“At the beginning of the Covid period, house prices were supressed as well,” he said. “Only about 5% came off, but it was a drop. That’s when the middle-income earners have the opportunity to enter to the market, especially when they’ve got stable employment.”
“You’ve seen in the APRA stats that household savings are growing during the Covid period. People aren’t going on holiday, they might have delayed a car purchase and other major goods. We’ve seen the same.”
“The savings growth has been around 14%, and it’s off the back of that and our strong capital position. We didn’t set out to have 20% growth, but because we had such strong savings account growth, we could have either parked the money in high quality liquid assets, earning 1-2 basis points, or we could have lent it to our members.”
“We took the second path because we had the capital and funds to do it. We accelerated our plan, took an agile approach – did all those buzzwords and got the money out the door. Thanks to all our staff working diligently from home, we were able to balance the books.”