Credit edit: Credit unions being reclassified as banks has caused revenue declines

Successive cash rate cuts over the past five years have hurt the Credit Unions industry's performance. As the Australian economy transitions away from mining and towards non-mining service sectors, the RBA has cut the cash rate to historic lows. The cuts have had a detrimental effect on the interest income generated on credit unions' loan portfolios. Even more damaging has been the effect of many credit unions exiting the industry due to their conversion to bank status. As a result, a portion of the industry's revenue and asset base has been reclassified to the National and Regional Commercial Banks industry. Subsequently, industry revenue is forecast to decline at an annualised 15.9% over the five years through 2016-17, to $1.61 billion. Industry revenue is projected to decline by more.

Industry Statistics & Market Size
Annual Growth 12-17
Forecast Growth 17-22

Industry Threats & Opportunities

  • Many credit unions have exited the industry due to their conversion to bank status
  • Enterprise numbers are declining as larger players transform into banks to remain competitive
  • Credit unions are expected to increase their brand visibility and expand their loan portfolios
  • Industry Report - Industry Analysis Chapter

    The conversion of eligible credit unions to banks has driven the Credit Unions industry’s revenue decline over the past five years. This trend to convert to bank status has led to fewer enterprises, reduced industry assets and lowered aggregate industry revenue. Additionally, the easing of monetary policy has further weighed on industry revenue, with the cash rate declining and interest earned on loan portfolios falling. Industry revenue is expected to decline at an annualised 15.9% over the five years through 2016-17, to $1.61 billion. This decline includes a projected 15.0% revenue fall in 2016-17. However, this representation of the industry’s performance is misleading due to the reclassification of several credit unions as banks...purchase to read more.

    Additional Insights for the Credit Unions Industry

    IBISWorld identifies 250 Key Success Factors for a business.The most important for the Credit Unions Industry are

  • Access to the latest available technology and techniques
  • Having an extensive distribution/collection network
  • Financial position of the company (as against financial structure)
  • IBISWorld analysts also discuss how external factors such as Cash rate and Consumer sentiment index in the Credit Unions industry impact industry performance..

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    What's in this report

    What is the Credit Unions Industry?

    This industry consists of financial institutions known as credit unions or cooperatives, which are owned by their members. Industry players provide their members with banking services, mainly deposit taking and lending.

    Industry Products
  • Residential mortgages
  • Personal loans
  • Commercial loans
  • Deposit accounts and other
  • Industry Activities
  • Mortgage lending
  • Personal lending
  • Commercial lending
  • Deposit accounts
  • Table of Contents

    Industry Definition
    Main Activities
    Similar Industries
    Additional Resources
    Industry Statistics Snapshot
    Industry Structure
    Executive Summary
    Executive Summary
    Key External Drivers
  • Cash rate
  • Consumer sentiment index
  • Mortgage affordability
  • Residential property yields

  • Current Performance
  • Cash rate
  • Bad debts
  • Regulation
  • Consolidation and exit
  • Chart: Revenue Growth

  • Industry Outlook
  • Funding limitations
  • Cash rate
  • Competition and reforms
  • Consolidation
  • Table: Credit Unions Industry Revenue Outlook

  • Industry Life Cycle
  • Life cycle reasons
  • Chart: Benchmarking - Credit Unions Industry Lifecycle vs The Economy

  • Supply Chains
    Key Buying Industries
  • Consumers

  • Key Selling Industries
  • Accounting Services
  • Custody, Trustee and Stock Exchange Services
  • Legal Services

  • Products & Services
  • Residential mortgages
  • Deposit accounts and other
  • Personal loans
  • Commercial loans
  • Chart: Credit Unions Industry Products and Services Segmentation

  • Demand Determinants
    Major Markets
  • Owner-occupied property buyers
  • Investor property buyers
  • Household sector
  • Commercial sector
  • Chart: Major Market Segmentation for the Credit Unions Industry

  • International Trade
    Business Locations
    Chart: Business Locations by State
    Market Share Concentration
    Key Success Factors
    Cost Structure Benchmarks
  • Chart: Cost Structure Benchmarking – Sector vs Credit Unions

  • Basis of Competition
  • Internal competition
  • External competition

  • Barriers to Entry
  • Table: Barrier to Entry Checklist for the Credit Unions Industry

  • Industry Globalization
    Credit Union Australia Ltd, Australian Central Credit Union Ltd,
  • Table: Credit Union Australia Ltd - financial performance
  • Table: Australian Central Credit Union Ltd - financial performance

  • Capital Intensity
  • Chart: Level of Capital Intensity for the Credit Unions Industry
  • Chart: Tools of the Trade: Growth Strategies for Success

  • Technology & Systems
    Revenue Volatility
  • Chart: Volatility vs Industry Growth

  • Regulation & Policy
    Industry Assistance
    Table: Industry Data for the Credit Unions Industry
  • Industry Revenue (2008-2022)
  • Industry Gross Product (2008-2022)
  • Establishments (2008-2022)
  • Businesses (2008-2022)
  • Employment (2008-2022)
  • Wages (2008-2022)
  • Total Assets (2008-2022)

  • Table: Annual Percentage Change for Key Industry Data
    Table: Key Ratios for Industry Key Data
    Common Equity Tier 1 (Cet1)
  • Capital as defined by Basel III regulations that are used in calculation of capitalisation ratio, and includes common equity and retained earnings.
  • Interest Rate
  • A rate charged on funds borrowed (lent) that is repaid (paid out) over and above the principal amount borrowed.
  • Mortgage
  • A loan financing the purchase of real estate with specified payment periods and a fixed or variable interest rate.
  • Mutual Organisations
  • Organisations owned by and for the benefit of members. They exist for raising funds from their members, which are used to provide common services to all members.
  • Write-Off
  • A loan that is deemed to be not collectible where the remaining amount is written off as an expense.
  • What Our Customers Say

    Why buy this report?

    IBISWorld’s Credit Unions market research report offers insightful industry analysis and research into the market at the national level. IBISWorld’s in-depth industry market research is presented in a logical and consistent format. The industry report contains key industry statistics, market size, industry trends, and growth and profit forecasts for a 5-year outlook period.

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    This report on Credit Unions:
    • Provides Market Size information to assist with planning and strategic decisions.
    • Includes the necessary information to perform SWOT, PEST and STEER analysis.
    • Helps you understand market dynamics to give you a deeper understanding of industry competition and the supply chain.
    • Analyses key performance and operational metrics so that you can benchmark against your own business, that of your customers’ businesses, or your competitors’ businesses.
    The Credit Unions market research report includes:
    • Historical data and analysis for the key drivers of this industry
    • A five-year forecast of the market and noted trends
    • Detailed research and segmentation for the main products and markets
    • An assessment of the competitive landscape and market shares for major companies
    • And of course, much more

    IBISWorld reports on thousands of industries around the world. Our clients rely on our information and data to stay up-to-date on industry trends across all industries. With this IBISWorld Industry Research Report on Credit Unions, you can expect thoroughly researched, reliable and current information that will help you to make faster, better business decisions.

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