Customer owned banking sector grows

The Customer Owned Banking Association (COBA) has said recent figures show customers continue to turn to customer owned banks.

The Australian Prudential Regulation Authority (APRA) released banking figures yesterday (12 December) for the September 2018 quarter, a separate publication to the banks’ property exposures.

The figures show growth in mutuals’ total assets, rising from $113billion to almost $116billion.

COBA chief executive Mike Lawrence said the figures show that Australians are turning to a model that focused on the customer first.

He said, “After the year long exposure of misconduct at the Financial Services Royal Commission, Australians are looking to banking institutions that put them first.

“With the customer owned model, 100% of profits are used to benefit the customers. Our sector is profit-making but not profit-maximising. We’re not trying to squeeze our customers to please shareholders. We’re not perfect but we are not conflicted about who we are working for.”

APRA’s September 2018 quarterly ADI Performance Statistics also show that the sector’s deposit and housing loan growth outperformed the major bank and the system on both an annual and quarterly basis.

The customer owned sector grew at around double the rate of the major banks over the year and deposits in the sector nearly reached $99billion at 5% growth year on year.

Housing loans were at more than $86billion and grew by 6.5% from the year before.

While the major banks’ deposits are at more than $2trillion, the growth has slowed to 2.2% year on year. The majors’ housing loans were at $1.6trillion, but with a 3.4% growth.

Lawrence said that while consumers are continuing to put their faith in the customer owned model, more can be done to create a more competitive banking sector.

“It’s clear that greater competition leads to greater customer outcomes,” he said.

“While our sector continues to grow, more needs to be done to improve the regulatory system to make a fairer environment for the customer owned sector to compete against the ‘Big Four’.”