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Chairman's Review

 
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Chairman's Review

Alan Beanland

ALAN BEANLAND

Welcome to this, my eighth and final Chairman’s Report for CUA before I retire at the conclusion of the 2017 Annual General Meeting.

As a leader, you always strive to leave the organisation in better shape than when you started. I am proud of what the CUA team has achieved over this time for our growing member base and I am confident that we are well placed to continue this progress into the future.

Last year, I commented that CUA was facing into an uncertain global environment, characterised by economic and political instability and record low interest rates. As expected, economic conditions have presented a challenge, prompting an increase in regulatory oversight of residential lending.

However, CUA has weathered these headwinds to produce a strong result, building on our performance in recent years. In particular, we have achieved some of the strongest CUA member growth of recent years. Net member growth for CUA’s banking business of 13,409 was almost 70% higher than the previous 12 months, lifting our total members to 453,122.

Despite slower lending growth, CUA settled $2.81 billion in loans during the year, helping to lift consolidated assets to $13.75 billion (up from $12.90 billion last year). The retail deposits which our members hold with CUA were also up 5.2% to $8.76 billion (from $8.33 billion).

These outcomes helped CUA to post a strong full-year financial result, with a consolidated Net Profit after Tax (NPAT) of $55.87 million (up 8.1% from $51.66 million). This means CUA is well placed to continue to deliver benefits to members as a sustainable and growing mutual. Our position is supported by CUA’s healthy capital reserves, with a capital adequacy ratio of 14.28% and $980 million in net assets.

It was also an outstanding year for CUA’s subsidiaries, with the successful launch of CUA Health’s new suite of hospital and extras insurance products in November 2016. CUA Health contributed $7.51 million to the CUA Group profit. CUA Health issued 5,873 new policies during the year and now insures 78,993 Australians. Credicorp Insurance issued 4,276 new policies during the year, meaning Credicorp now protects 13,704 CUA members.

Reflecting back to this time last year, I said that CUA’s Mutual Good community strategy would become a key differentiator for CUA as we work towards an annual community investment of 3% of Net Profit before Tax and Community (NPBTC). Our NPBTC for this year was $80.22 million and in only the first year of our Mutual Good strategy, we committed $2.28 million to community, or 2.8% of NPBTC. I’m pleased to see how this investment is contributing towards initiatives that will have a positive social impact across issues like domestic and family violence, indigenous financial literacy and reducing sudden deaths of children and babies. This is just the beginning, as CUA scales up its Mutual Good initiatives in the coming year.

Finally, I talked about how CUA would focus on its digital agenda this year to enable members to engage with CUA through the channel of their choice. We’ve delivered on this commitment through rolling out digital wallets (Apple Pay, Android Pay and Samsung Pay) and enabling new-to-CUA members to open a transaction or deposit account via their mobile device. We’ve also entered into an exciting collaboration this year with Silicon Valley-based global banking innovator Pivotus Ventures as their exclusive Australia and New Zealand partner. We are taking a seat at the table with the world’s largest building society, Nationwide in the United Kingdom, publicly listed US West Coast bank, Umpqua and the Netherlands’ fourth largest bank, De Volksbank. At the same time, we are continuing work on developing our new CUA mobile banking app and preparing for real-time payments through the New Payments Platform.

Our People

Members celebrating the launch of our history book in Brisbane in May 2017

Our CUA team members have driven our success this year and I’d like to make special mention of their contribution. In August 2016, CUA implemented a new organisational structure approved by the Board to better equip our organisation to deliver on our 5-year strategy and ensure we continue to increase the capability and skills of our team. This has helped us focus our efforts on key initiatives such as ‘anywhere, anytime’ and life changes, while also improving our overall business performance within banking and our subsidiaries.

CUA team members have embraced the CUA Purpose – ‘Members working together through life’s changes for mutual good’ – and I’m pleased to see how this lens is being applied by the CUA leadership and my Board colleagues as part of our decision-making.

The CUA team also embraced the first year of our Queensland Cricket and Brisbane Heat sponsorship. This increased CUA’s brand profile and presence in the media, helping us to reach a new audience of potential members. Again, its success is testament to the way CUA team members across Australia – from Western Australia to Queensland - embraced and supported the initiative.

We continued to invest in developing our people and increasing CUA’s capability through leadership programs, Agile training and our new CUA Lending Academy. Supporting diversity and inclusion remains a key focus and for the 3rd consecutive year, I was pleased to see CUA recognised by the Workplace Gender Equality Agency as an employer of choice for gender equality.

While on the subject of our people, I’d like to also acknowledge all the people I’ve met and worked with – both current and former CUA team members – over my eight years as Chairman. You are the heartbeat of CUA and the reason we continue to grow.

A New Era

As we turn to the future, I can say with confidence that CUA is in a good position to continue driving innovation and building on our member-centric services. The incoming Chairman, Nigel Ampherlaw, is well placed to continue to lead the team with almost 40 years’ experience in financial services, including the past 6 and a half years on CUA’s Board.

In the year ahead, the Board will face continued challenges from the external political, economic and regulatory environment. As in previous years, these will require CUA to remain focused on its own strategic priorities, to provide the strength to withstand the uncertain environment, the rapid pace of technological change and emergence of new competitors.

The Board is keen to retain its focus on CUA’s foundations and maintaining a high-performing business, to drive continued growth and allow CUA to continue investing in the future. This will include further investment in new technologies, innovations and collaboration opportunities, like our Pivotus Ventures collaboration. The initiatives we hope to develop and bring to market as a result of our collaborations, both domestically and internationally, have the potential to deliver an improved member experience, as well as potentially giving CUA a competitive edge in the market.

CUA will look to further scale up its Mutual Good community activities to maximise the impact of our investment and strengthen the connection with community. CUA will also continue to evolve the way in which it supports members through their various life changes.

In closing, I am proud of what CUA has achieved in my time as Chairman. It’s been a privilege to have been part of that growth and success, particularly celebrating our 70 years of serving members. I look forward to seeing that trend continue under the guidance of my experienced Board colleagues and the CUA leadership team.