Bad credit: The exit of several credit unions from the industry has reduced revenue

Successive cash rate cuts have negatively affected the Credit Unions industry's performance over the past five years. In an effort to stimulate the Australian economy, the RBA cut the cash rate to a historic low of 1.50% in August 2016. The cuts have limited the interest income generated on credit unions' loan books. Even more damaging has been the decision of many credit unions to exit the industry and convert to banks. 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 expected to decline at an annualised 7.7% over the five years through 2018-19, to $1.60 billion. Industry revenue is anticipated to rise by 0.2% in more.

Industry Statistics & Market Size
Annual Growth 14-19
Forecast Growth 19-24

Industry Threats & Opportunities

  • Many credit unions have converted to banks and exited the industry over the past five years
  • Enterprise numbers are declining as larger players transform into banks to remain competitive
  • Credit unions are projected to increase their brand visibility and expand their loan portfolios
  • Industry Report - Industry Analysis Chapter

    The conversion of many credit unions to banks has driven the Credit Unions industry’s revenue decline over the past five years. The number of industry operators leaving the industry has reduced industry assets and lowered industry revenue. The easing of monetary policy over the past five years has further weighed on industry revenue, with the cash rate declining and interest earned on loan books falling. Overall, industry revenue is expected to decline at an annualised 7.7% over the five years through 2018-19, to $1.60 billion. This includes slight growth of 0.2% in the current year, as lenders raise interest rates on their loan products.Cash rateThe RBA’s successive cash rate cuts have driven the industry’s decline over the past five years. Cre...purchase to read more.

    Additional Insights for the Credit Unions Industry

    IBISWorld has determined the most important Key Success Factors for the Credit Unions are:

  • Access to the latest available and most efficient 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?

    The 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
  • Term 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 housing loan rates
  • 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
  • Term loans
  • Chart: Credit Unions Industry Products and Services Segmentation

  • Demand Determinants
    Major Markets
  • Owner-occupied property buyers
  • Household and commercial sector
  • Investor property buyers
  • 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, Queensland Country Credit Union Ltd, Bananacoast Community Credit Union Limited,
  • Table: Credit Union Australia Ltd - financial performance
  • Table: Australian Central Credit Union Ltd - financial performance
  • Table: Queensland Country Credit Union Ltd - financial performance
  • Table: Bananacoast Community Credit Union Limited - 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 (2010-2024)
  • Industry Gross Product (2010-2024)
  • Establishments (2010-2024)
  • Businesses (2010-2024)
  • Employment (2010-2024)
  • Wages (2010-2024)
  • Total Assets (2010-2024)

  • 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 that raise funds from their members to provide common services.
  • 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

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    • Includes the necessary information to perform SWOT, PEST and STEER analysis.
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    • Historical data and analysis for the key drivers of this industry
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