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Financial results reflect CUA’s focus on digital banking with a human touch

man and woman on couch looking on tablet

Australia’s largest credit union, CUA, will continue to enhance member experience by investing in innovation and delivering digital banking initiatives with a human touch, off the back of strong lending, retail deposit and member growth revealed today.

CEO Rob Goudswaard said today that CUA had invested heavily in its member initiatives during the past year to provide a better member experience, return more value to members and increase choice in how members interact with CUA and manage their money.

“We now offer members a full suite of digital wallets across Apple, Android and Samsung devices. We’ve delivered an updated mobile banking app provided by Kony, who’ve received international recognition[1] as a leader for their mobile app development platform,” Mr Goudswaard said.

“Members are benefitting from faster payments through CUA being an early adopter of the New Payments Platform (NPP), with 16,500 PayIDs registered by our members in the first four months. And we’ve had outstanding feedback from the 2,000 members piloting our iM CUA chat-style messaging app, which is the first innovation to come from Pivotus Inc., the international banking collaboration based in Silicon Valley that CUA joined this year.

“We’re also finding new ways to return value to members, including through our 4 per cent health insurance discount for those who combine both their banking and health insurance with CUA. This has already resulted in $800,000 in discounts being passed back to members in FY18 through reduced premiums.

“Our CUA team dedicated 1,055 days to volunteering in the community across the year – equivalent to almost $700,000 in value provided back to the community. When combined with our community investment of $2.43 million, or 3 per cent of FY18 pre-tax profits, we’ve delivered over $3 million in value to the community this year.”

Although CUA’s significant investment in innovation and the activation of its new digital offerings flowed through to the CUA Group profit results for the year, Mr Goudswaard remained upbeat.

“We are incredibly proud of what we’ve achieved. The investments we’ve made will help future-proof CUA and improve the banking experience for members now and for many years to come,” he said.

Group financial performance

CUA Group reported Net Profit after Tax (NPAT) for the year to 30 June 2018 of $54.79 million, down 1.9 per cent on the prior year. The timing of CUA’s lending growth, which was concentrated in the final months of FY18, also influenced the result. CUA Group reached $1 billion in members’ funds for the first time, an increase of $56.8 million.

CUA recorded net growth in banking members of 20,008 people, taking CUA’s total banking membership to 473,130 – eclipsing last year’s record net member growth. CUA now contributes to the financial wellbeing of more than 515,000 Australians, through its banking, health, motor and home insurance products and services.

“Member growth was a standout for the year and that reflects a combination of factors, including the traction we are already gaining from our digital focus,” he said.

“It also reflects a 19.2 per cent increase in the total value of new lending this year and CUA’s investment in building brand awareness in new markets through our ‘Good Move’ home loan campaign and sponsorships of the Brisbane Heat Big Bash League (BBL) teams and the AFL’s Carlton Football Club.”

Mr Goudswaard noted that while member growth was important, so too was earning the trust and respect of existing members, reflected in higher member satisfaction and member advocacy.

“This year we’ve placed a real focus on better understanding our members. We’ve seen a significant uplift in member advocacy through our Net Promoter Score, with CUA’s ranking improving from 5th to 3rd across the industry, and we’re making positive headway in closing the gap to the market leaders.”

CUA’s banking operations (ADI)

Strong competition in the home loan market, particularly for owner-occupied loans, and the sustained low interest rate environment continued to place pressure on CUA’s margins throughout the year, impacting CUA’s financial performance.

New lending was up 19.2 per cent on the prior year to $3.35 billion, taking CUA’s total loan book value past $12 billion for the first time. Owner-occupier and investor mortgage lending accounted for the majority of the new lending at $3.10 billion (up 22.5 per cent), while CUA issued $219.7 million in personal loans (down 14.4 per cent).

Despite the strong lending growth, CUA Group experienced more subdued growth in Net Interest Income, which grew by only 5.3 per cent year-on-year to $252.18 million.

This reflected a slow start to FY18 for lending, following the investor lending restrictions introduced in FY17. Much of CUA’s lending growth occurred in the second-half of the year and on lower-margin products, including CUA’s competitive home loan offer for owner occupiers, meaning minimal interest income from this new lending flowed into the FY18 result. Mr Goudswaard also noted that CUA had been absorbing higher wholesale funding costs for some months, and the outlook for FY19 was that this would continue to put pressure on margins in the coming year.

CUA’s pause on investor lending, implemented in March 2017 to ensure CUA stayed within regulatory benchmarks, resulted in lower lending volumes early in FY18. While the investor lending restrictions have since eased, CUA’s investor lending remained subdued for much of the year.

Overall, the banking business or ADI (Authorised Deposit-Taking Institution) recorded NPAT of $52.17 million, up 5.1 per cent on the prior year. This was boosted by the dividend paid from CUA Health to the ADI.

CUA Health

CUA Health continued to make a positive contribution to the CUA Group result, posting an
$8.99 million Net Profit after Tax (NPAT), a $1.49 million uplift on the previous full-year result. The CUA Health result helped offset market challenges facing the banking business, and was driven by strong investment performance and lower claims levels both for CUA Health and industry-wide.

“The continued strong performance of our CUA Health insurance business is creating more opportunities for us to look at how we return value to members and innovate to provide a better member experience and improve our efficiency, both of which will put downward pressure on costs,” Mr Goudswaard said.

“Affordability is the biggest issue facing the health insurance sector but I’m pleased to report that this year, we passed on our lowest average premium increase in almost two decades.

“We rolled out a refreshed CUA Health mobile app, and also launched three new lower cost hospital cover products this year. Our new hospital and extras package, aimed at first time buyers and young people, has a bonus feature to top up any gap on the first few claims.

“Finally, we entered into a collaboration with fintech Flamingo AI and recently began a pilot of its chatbot “SAM” in our CUA Health insurance business. This is not a replacement for our human service team, but should boost the number of new policies taken out via digital channels.”

This focus on member experience saw CUA Health recently ranked third by Roy Morgan on their customer satisfaction ratings for health insurers.

CUA Health insured 75,134 Australians as at 30 June 2018. Premium revenue for the year was relatively unchanged from the previous year at $144.55 million, while CUA Health returned
$120.64 million in benefits to policy holders, or around 83.5 cents in the dollar.

Credicorp Insurance

Credicorp Insurance posted a full-year NPAT of $2.03 million, which was $0.90 million higher than FY17. This subsidiary now provides insurance to 13,392 members. Credicorp’s improved performance reflected lower than forecast claims and improved operational efficiencies.

Forward outlook

“Looking to the year ahead, our focus will be on delivering simple, competitive and effortless products and services, while maintaining the personalised service and care that members know and trust,” Mr Goudswaard said.

“Our first priority is to deliver a seamless, streamlined end-to-end deposit process, with simplification of our home loan process to follow.

“I’m excited to share that we will shortly begin a wider rollout of our iM CUA app, progressively offering this to all current and future members with compatible Apple and Android devices.

“On the regulatory front, we are continuing to work with our industry bodies and Government towards the legislative reforms that will give mutuals the ability to raise capital for the first time. We are expecting draft legislation to be released this year, with legislation to hopefully be passed by Parliament in early 2019. This is a huge win for mutuals following the Hammond Review into access to capital and will give us more flexibility to seize on future opportunities.”


Financial & member highlights for year ended 30 June 2018:

  • CUA Group consolidated Net Profit after Tax (NPAT) of $54.79 million. The result is down by 1.9 per cent on the previous year, reflecting additional investment in innovation and digital initiatives
  • Retail deposits grew by 5.3 per cent for the year to a record $9.22 billion
  • $3.35 billion in new loans settled during the year, up 19.2 per cent
  • Loans under management were up 6.7 per cent to $12.30 billion
  • Consolidated assets of $14.32 billion, up 4.1 per cent for the year
  • A net increase of 20,008 CUA banking members, taking total members to 473,130 and the total number of Australians with CUA products to 515,577

Key achievements for FY18:

  • CUA began trialling the first innovation to come out of the international collaboration with Pivotus Inc. Around 2,000 members were part of the trial of the iM CUA app, which is the first app in Australia to connect members with a personal banker through their smart phone.
  • CUA adopted Australia Post’s new digital identity verification service Digital iD™, after being the first Australian banking provider to sign up to trial the platform.
  • CUA was one of the earliest adopters of real-time payments through the New Payments Platform (NPP), including enabling members to send or receive payments using a PayID.
  • CUA rolled out a new mobile banking app and new CUA Health app to give members improved functionality and features on the go.
  • CUA signed up to collaborate with Sydney based artificial intelligence company Flamingo AI, to pilot a ‘chatbot’ in its CUA Health insurance business.
  • CUA expanded its digital wallet offering to include eftpos on Google Pay and Apple Pay, meaning CUA now supports the full range of digital wallets, for all devices and cards.
  • CUA expanded its choice of channels for home loan borrowers, joining the uno Home Loans panel and online mortgage finance platform LoanDolphin.
  • CUA signed on as a Platinum Partner of AFL club Carlton FC in March 2018, to help raise CUA’s profile and grow the business in Victoria.
  • CUA continued partnering with the Queensland Cricket Association and Brisbane Heat BBL team for a second year. CUA stepped up support of the women’s team by signing on as their Principal Partner for WBBL04 in the 2018-19 summer.
  • CUA repeated its support of the Ponting Foundation, donating $87,000 to the charity as part of the BBL season.
  • CUA awarded around $190,000 in grants to community groups across 19 regions of Australia, in the second round of its Mutual Good Community Grants.
  • CUA was awarded the WGEA Employer of Choice for Gender Equality citation for the 4th consecutive year.