Mutuals perform well despite pressure on margins

27 November 2019

Australia’s mutual banks, building societies and credit unions (the ‘Mutuals’) performed well in 2019, showing strong balance sheet and lending growth despite a tough overall environment that saw a squeeze on net interest margins.

KPMG Australia’s Mutuals Industry Review 2019 is based on the financial results of 44 Mutuals (over 95 percent of the sector) as well as a qualitative survey that asked Mutuals to share their views on the risks, challenges and opportunities they see facing the industry. It shows that Mutuals’ balance sheets grew 4.3 percent (2018: 5.6 percent) to $9.2b, while overall operating profit before tax fell by 6.1 percent (2018: grew 4.7 percent) to $593.3m (2018: $631.8m).

Ian Pollari, KPMG Australia’s National Sector Leader – Banking, commented: “The financial result underscores the ability of the Mutuals to deliver balance sheet growth across key segments such as residential lending, despite the extremely tough operating environment for the industry more broadly.”

“At the same time, the Mutuals operating in a financial services industry facing unprecedented political and regulatory scrutiny, as well as record low interest rates, strong competition and subdued demand for credit, have not been immune from the downward pressure on margins and profitability,” he said.