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People’s Choice surpasses $8bn milestone

The mutual lender’s book has grown to over $8 billion, following strong growth in the final quarter of the financial year 2021, partly attributed to the broker channel.

People’s Choice has, for the first time, reached a total member loan and advances figure of over $8 billion, according to its FY21 results. 

The figure increased 2.6 per cent on the previous financial year, and comes following strong lending growth.

The credit union highlighted that the final quarter of the year resulted in the largest quarterly improvement for its total loan portfolio for seven years, at $147 million.

According to People’s Choice chief executive, Steve Laidlaw, this figure was partly achieved as a result of the organisation’s decision to expand its presence in the Victorian market via the broker channel

“Victoria has been a focus of our growth strategy for a number of years and the immediate success of our broker strategy has confirmed we are certainly on the right track,” Mr Laidlaw said. 

“We are very happy with the initial results and we have every confidence this decision will allow People’s Choice to help even more Australians to find a new home.”

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In addition, the mutual lender saw 14,598 new members join during the 2020/21 period, delivering a net increase of 8,592 and bringing People’s Choice’s total membership to more than 390,000.

The Adelaide-based organisation also confirmed it ended the financial year with $7 billion in retail deposits (up 5.2 per cent) and $9.7 billion in total assets (up 2.4 per cent). 

Its statutory net profit before tax was $29.7 million (4.6 per cent less than last financial year’s figure). 

“The profit result continues to be moderated as a result of our investment in new technology platforms and broader business transformation, with over $12 million invested during the financial year,” Mr Laidlaw explained.

“These investments are a critical part of our continued success and ability to meet evolving member expectations regarding high service levels, community support and highly competitive pricing.” 

Due diligence for Heritage merger continues

The FY21 results could be one of the last for the mutual lender as a single entity, as it looks to merge with Toowoomba-based Heritage Bank.

If the deal completes, it would result in the two lenders combining to become an entity with over 700,000 members. 

Mr Laidlaw confirmed that a due diligence process is currently underway and “progressing well”.

“Our two organisations are very similar, not only in size, culture and strategy but also in our absolute commitment to mutuality and remaining member-owned,” Mr Laidlaw said. 

“Clearly, we believe there are many benefits of this unique pairing of equals that would create Australia’s leading customer-owned banking organisation.

“By bringing our two organisations together, our increased size and scale would enable us to deliver more for our members through enhanced products, services, digital capabilities and competitive pricing. It will also allow us to provide additional support to the communities in which we operate and our members live.”

Once the due diligence completes, the two lenders will decide whether to proceed, and – if so – the proposal will go to a member vote in “the first half of next year,” according to Mr Laidlaw.

Heritage Bank CEO Peter Lock told Mortgage Business last month that it would be “a true merger of equals”.

“Both organisations are of very similar size in balance sheet, we’re the third largest mutual, they’re the fourth largest mutual,” he said.

“If you put those together, tha’'s a $22 billion bank with 1,700 people, 90 branches and a complementary geographic footprint that actually creates a true national mutual bank. In doing that, we will table both brands and create a new organisation with a new brand, under one system.

It’s not a takeover; it’s blending two organisations and creating a new one. And it will be one of the largest mutuals. While we’re not doing it for that reason, scale is important in the banking industry and particularly in the mutual industry.

“While we are both successful organisations, joining forces would provide us with the scale, profile and nationwide presence to redefine mutual banking for current and future members.”

[Related: Heritage Bank in merger talks]

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