Mutuals are ‘safer than banks’
Credit Unions were squeezed in 2009 by intense competition for deposits and falling home loan rates. Financial advisers KPMG say underlying profits at credit unions fell 17 per cent in 2009.
Building societies posted a 10.1 per cent rise in underlying profits because they had more modest deposit growth and so maintained interest margins.
KPMG noted that bad debt levels for credit unions and building societies – which traditionally make low-risk loans such as home loans – remained far below those of bigger banks.
Louise Petschler, CEO of Abacus, a group representing member-based mutual institutions, says the big banks carry a higher risk than mutuals "The GFC proves that boring in banking is good," she said.
Mutuals are now recovering from the global financial crisis and preparing to provide more competition to the big banks in home loans and deposits. "The challenge now is to ensure Australians have a genuine choice," said Petschler.
Source: Courier Mail