The mutuals faced a testing year in 2012, with a 9.9 percent decrease in operating profit after tax, while achieving growth in assets of 4.5 percent. The reported decrease in operating profit after tax was caused partly by a reduction in margins and falling interest rates.
Asset growth was slower during the current financial year due to the intense competition in the lending and deposits markets, as well as global economic uncertainty which continues to weigh on consumer sentiment. Despite the challenging environment the mutuals produced positive asset growth at an average of 4.5 percent (7.6 percent in 2011), higher than the major banks average of 3.9 percent (8.8 percent in 2011).
KPMG also surveyed the mutuals’ views on themes of the current banking landscape including: social media, mobile technology and the impact of regulation and risk management.
The responses give insight into how the mutuals see the future:
- 88 percent of respondents consider social media to be important to their strategy
- 88 percent expect to spend more in 2013 on mobile technology
- 72 percent believe Basel III will disadvantage their business
- 68 percent said a fifth banking pillar isn’t possible
- 74 percent believe there are government and industry barriers affecting their ability to compete
- 67 percent called for a review of the financial system.
The results indicate that the sector is facing a series of complex challenges and opportunities including the impact of increased regulation, need to identify innovative ways to grow, and the need for sophisticated technology infrastructure.
2013 marks the beginning of a new phase for the mutuals. In an extremely competitive market attracting customers by continuing to focus on high quality service, customer satisfaction and strong brand strategy will be the priority.
If you would like to discuss either of the report findings in more detail please contact us.