Credit Union Australia (CUA) is set to double its size within five years as it ramps up its campaign to win more customers and compete against regional banks.
Australia’s largest credit union is aiming to increase its assets under management from $8 billion to $16 billion and obtain a credit rating.
It will also increase its marketing expenditure by 50 per cent in 2010/11 to raise its profile.
Chief executive Chris Whitehead said CUA wanted to be positioned in consumers’ minds as an institution on the same level as the three regional banks, appealing to those who are disenchanted with the big four banks.
“The big advantage we have versus the major banks is innovation. This will be an engine for growth for us,” he told reporters in Melbourne on Friday.
CUA will never sacrifice its business model as a mutual which is 100 per cent customer owned and returns all profits to customers, he added.
Andrew Hadley, CUA’s group manager of strategy and marketing, said the mutual will benchmark itself against the regional banks and is closing the gap on them over prompted brand awareness.
CUA’s roots are in Queensland where its brand awareness is near 100 per cent but it still has ground to make up in NSW and Victoria, he said.
CUA has 72 branches and more than 400,000 customers after merging with Plenty Community Credit Union in June.
Its balance sheet is dominated by home mortgages to consumers, with all business loans being secured by homes.
CUA spent 2009/10 trying to restore loan growth after it increased just 0.8 per cent in 2008/09, down from 9.3 per cent the previous year as customers fled to the perceived safety of the big four banks during the credit crisis.
Loan growth across the mutuals sector, which includes 107 other credit unions and 11 building societies, was the weakest in five years during 2008/09.
It bounced back during the March 2010 quarter with credit unions having $32.7 billion of home loans on their books, according to data from the Australian Prudential Regulation Authority.
Mr Whitehead said CUA deserves to be perceived as being as safe as a bank because of its very conservative business model and obligation to adhere to regulations very similar to the banks.
“We carry exactly the same level of level of security as any other ADI (authorised deposit-taking institutions).”
“We’d like to see an ADI become an ABI (authorised banking institution). That would level the playing field a bit because we have the same regulation.”
But customers perceive the sector as less robust than the banks, when the primary difference is just the ownership structure of mutuals, he said.
CUA’s annual profit increased 17 per cent to $42.98 million in 2008/09.
It will report its 2009/10 result on September 8.