Credit Unions and Building Societies in Australia - Industry Market Research Report

Booking it: Revenue continues to fall as firms exit the industry to become banks

The Credit Unions and Building Societies industry has faced challenging operating conditions over the past few years. While low interest rates after the COVID-19 outbreak cut into interest income generated on providers' loan books, the RBA has since been consistently hiking the cash rate. This trend has elevated interest income through higher interest rates on existing loans, but this factor - alongside drops in consumer sentiment - have discouraged people from entering new mortgages or loans. In particular, mortgage affordability has toppled, causing potential buyers to put off purchasing property. Many credit unions and building societies have pivoted to providing banking services, and therefore exited the industry, to remain viable or take advantage of banks' comparatively greater flexibility. While revenue has taken a hit because of companies leaving the industry, profit margins have grown as a result of consolidation. Providers have entered partnerships or mergers to pool assets and maintain their profitability, causing profit margins to climb despite falling revenue. Overall, revenue is expected to drop at an annualised 6.4% to $1.8 billion over the five years through 2023-24. This trend includes an anticipated climb of 3.7% in the current year, as a high cash rate and improved consumer sentiment have benefited demand conditions.

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

This report covers the scope, size, disposition and growth of the industry including the key sensitivities and success factors. Also included are five year industry forecasts, growth rates and an analysis of the industry key players and their market shares.