CUA expects its health insurance business to grow faster than its home lending activity as a weak economy dampens demand for mortgages.
Australia’s largest credit union expects its revenue from home lending to increase by between five and six per cent in the 2015/16 financial year, chief executive Rob Goudswaard said.
Revenue in the health business is forecast to grow by between eight and nine per cent.
“We cater to a very niche market, but based on the experience so far, we don’t see the same level of growth in home loans as last year,” he said.
If home prices and unemployment continue to rise, the number of people willing to take on more debt will drop off, Mr Goudswaard said.
CUA made a profit of $48.8 million in the year to June, down slightly from the previous year, despite profit growth of 11 per cent in its banking operations, driven by mortgage lending and customer growth.
The company issued a record $3.35 billion in new loans during the year.
The health insurance business paid out more benefits in the year, and was also required to pay tax for the first time after becoming a `for profit’ fund in early 2015.
The charges were expected to remain steady with no further significant increase, Mr Goudswaard said.
“Only eight per cent of our overall members are part of health, so we see that business as a continuing growth opportunity,” he said.
CUA is also investing $24 million in the year ahead on technology and product offerings, aiming to improve customers’ experiences with its banking operations and improve efficiency, Mr Goudswaard said.
CUA is owned by its 430,000 customers, with profits reinvested back into the business.