APRA curbs cost major credit union mortgage customers

CUA posted a 4.9 per cent fall in cash profit to $35.31 million over the six months to 31 December 2017.

Although $1.28 billion in new loans settled over the period, up by 9.1 per cent, CUA’s loan book remained flat at $11.49 billion.

CUA chief executive Rob Goudswaard said that lending volumes were impacted by strong competition in the owner-occupier lending market, which fuelled a high level of refinancing activity across the sector.

“CUA’s pause on investor lending, implemented in March 2017 to ensure CUA stayed within regulatory benchmarks, also contributed to lower lending volumes in the first few months of FY18,” Mr Goudswaard said.

“This was consistent with the Productivity Commission’s observations that investor lending restrictions, or macro-prudential measures, were negatively impacting smaller lenders.

“Although CUA has since made a phased return to investor lending, CUA was not able to consistently support all of its investor members’ lending needs during the period, which adversely impacted lending growth and retention of investor members.”

Loans being refinanced from CUA to other lenders in July 2017 were 33 per cent higher than the same time a year earlier.

However, after launching a new mortgage product, the CUA Advance Variable Home Loan for owner-occupiers, and running its “Good Move” home loan marketing campaign, CUA did see lending rebound in the final few months of the last calendar year.

“Net interest income (NII) was also higher at $126.16 million, up by 6.3 per cent on the prior first-half. The stronger momentum on lending has continued into the second half,” Mr Goudswaard said.

The credit union continued to see strong growth in its personal loans business with $121.1 million issues over the six months, up by 13.8 per cent on the prior corresponding period.

[Related: CUA impacted by ‘extremely competitive market’]