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Bulk of deferral customers restart payments: CUA

The customer-owned bank has reported that around 95 per cent of home loan customers whose payment pause has expired have returned to full payments.

CUA has reported its results for the 2020 financial year, in which it said that it has approved over 4,300 applications for financial assistance across the year, the majority of which were related to the coronavirus pandemic.

The bank’s CEO, Paul Lewis, said that in FY20, 95 per cent of home loan customers on coronavirus hardship packages such as the deferral of their home loan repayments and whose three-month payment pause has expired have now resumed full payments.

Mr Lewis said he expects those on six-month repayment pauses to resume full repayments in the near future.

“This is a very positive sign as an increasing number of members are approaching their six-month reviews in the weeks ahead,” Mr Lewis said.

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The group reported that it has paused repayments on nearly $1 billion in lending.

According to CUA’s financial results, loans under management increased by only 1 per cent to $13.58 billion, while CUA issued $2.83 billion in new lending for the year, the majority of which was for mortgages.

In the first half of FY20, the value of new loans dropped by 35.8 per cent, with a total of $1.47 billion in new loans issued for the six-month period ending 31 December 2019.

Mr Lewis had said at the time that the lower lending volumes reflected a “conscious business decision” to maintain a steady level of lending volumes across the full year.

The group reported that bad debts written off have decreased by 26.1 per cent to $6.5 million, which it said reflected lower volumes of new loans being written.

Furthermore, CUA said that it has set aside an additional $11.6 million in provisions for COVID-19 and natural disaster impacts on its loan book.

As a participant in the federal government’s First Home Loan Deposit Scheme (FHLDS), the bank has reported that it had received $244 million in loan applications by 30 June. The broker channel was responsible for about 60 per cent of these loans, a CUA spokesperson told Mortgage Business.

CUA Health has set aside a further $8.1 million in provisions for deferred claims, while CUA has directed more than $1 million in FY20 to tackle socioeconomic challenges exacerbated by COVID-19, including financial stress, family violence and digital exclusion.

The bank has allotted over $180,000 to bushfire relief and recovery efforts.

More broadly, CUA has reported that its net profit after tax (NPAT) has declined by 1.2 per cent on the prior year to $37.31 million.

Retail deposits have risen by 4.7 per cent to $11.08 billion, while net interest income was up 3.3 per cent to $268.24million.

Operating costs have increased by 6.5 per cent, driven by higher operational expenses linked to investments in projects, as well as increasing regulatory and compliance costs.

According to Mr Lewis, CUA has continued to invest in IT infrastructure throughout FY20, including investment in open banking and a new home lending system.

“CUA is committed to helping Australians achieve the dream of home ownership, and this is reflected in the fact mortgages make up around 95 per cent of our lending,” he said.

“In FY20, we’re pleased to have started the transformation of our home lending system, which will ultimately deliver faster decision making and a smoother digital journey for our members.”

Newcastle Permanent customers restart repayments

Similarly, mutual lender Newcastle Permanent recently revealed that of the 1,918 loans that had been granted a loan repayment deferral (totalling approximately $463 million, or 5 per cent of the total loan portfolio), 796 loans (totalling $206.8 million) remained in a deferred repayment arrangement as at 31 July 2020.

Of the loans that remain in deferred payment arrangements, the vast majority were principal and interest loans, and 79 per cent were owner-occupied, with 21 per cent being investor home loans.

CEO Bernadette Inglis commented: “Our personal approach allows us to work with our customers during their loan application to understand their individual financial circumstances; we want to ensure our customers have the right loan for them even as circumstances may change...

“We will continue to maintain individual contact with our customers who remain in deferral so that those who are in a position to resume their repayments can do so. For our customers who are unable to resume repayments, we will continue to work with them to identify the most appropriate solution for their circumstances.

“Encouragingly, of our customers who exited repayment deferral on 30 June, all except a handful made their July repayment,” Mrs Inglis said.

“I believe that our personal and individualised approach to the unprecedented situation presented by the pandemic has resulted in us delivering the best possible outcome for our customers,” the CEO continued.

“We have personally spoken to each customer and presented personalised options...

“Through this difficult period, we will continue to support our customers to ensure the most appropriate solution for their individual circumstances. We’ve been here for 117 years, and we remain committed to supporting our customers as we navigate our way through this pandemic,” concluded Ms Inglis.

[Related: Deferral exits surpass new deferrals for first time]

Bulk of deferral customers restart payments: CUA
Bulk of deferral customers restart payments: CUA
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