Strong growth in home lending by mutual banking sector
16 March 2010
Credit unions and building societies recorded double-digit growth in home lending in 2009 and have the competitive potential to become the missing ‘fifth pillar’ in the retail banking market.
“What is needed is more Government action to promote competition – specifically, an effective public awareness campaign about the prudential regulatory framework and the prudential standing of all regulated banking institutions,” said Abacus CEO Louise Petschler.
“In the past few days the Prime Minister has conceded major banks are ‘gouging’ their customers and the Treasury Secretary has admitted there has been ‘some diminution of competitive pressures’ in banking.
“We recommend action to inform consumers about the choice that already exists. A public awareness campaign about the prudential regulatory framework is a sound and measured response that can be implemented now.
“As outlined in our 2010-11 Budget submission available at coba3.nexusone.com.au, retail banking consumers have considerable choice beyond the major banks but are reluctant to take advantage of that choice because of misconceptions about the safety and security of competitors to the major banks,” Petschler said.
Figures out today from the Australian Prudential Regulation Authority show that total assets of credit unions and building societies increased from $66.4 billion in December 2008 to $69.9 billion in December 2009.
Total housing loans for credit unions and building societies increased by 11.3 per cent over the year to 31 December 2009. Housing loans now account for 84.1 per cent of total gross loans and advances for credit unions and 87.8 per cent for building societies.
“Credit unions and building societies are well positioned to apply greater competitive pressure on the major banks but we think the Government can play a role in helping to educate consumers about the choices available to them,” Petschler said.
For more information, please contact:
Mark Degotardi
Head of Public Affairs
02 8299 9053; 0419 998 201
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