Sound result in difficult times

Andrew Leys, of Credit Union South, says the firm is passionate about its purpose. Photo by Peter...
Andrew Leys, of Credit Union South, says the firm is passionate about its purpose. Photo by Peter McIntosh.
Credit Union South has reported another solid financial result in what chief executive Andrew Leys describes as continuing difficult trading conditions.

"Key challenges for us in the past 12 months include a decline in loan demand in the second half of the financial year, which has given rise to an overall decline in total loans for the full year."

CU South reported an operating surplus of $851,000 for the 12 months ended June 30 compared with $741,000 reported in the 15 months ended June 2010. CU South changed its balance date last year.

Total income for the reporting period was $18.5 million reduced to $15 million after deducting interest expenses and adding other income. Total expenses for the period were $14.15 million.

Bad and doubtful debts reduced to $1.57 million in the period compared with $2.25 million at June last year. Total reserves were up 5% to $18.1 million, total assets were up $3.6 million to $116.2 million, liquid assets were up 39% and loans to members were down $4 million.

Mr Leys told the Otago Daily Times the bad debts were reflecting difficult business conditions, particularly in the South Island.

"We are doing our best but there is still much to do. We work with the people to help them become financially strong but you get to the point when you have to hand the problem off to someone else."

CU South was committed to helping members through difficult times, he said.

Asked about the declining loans, Mr Leys said the credit union was the cause of its own problems because it had spent time working with members to help reduce their debt.

In the first half of the financial year, CU South had experienced lending growth against the trend. In the second half, there was a reversal as consumers started to understand the general sentiment of reducing debt and increasing savings.

"We are pleased the general population is deleveraging."

Another challenge was the closure of the Christchurch Palms office on February 22 after a major aftershock. The branch was scheduled to reopen today. A new branch opened in Hornby in July.

Mr Leys said he was excited about the future for CU South. A new service was being offered to employers and it reflected a credit union's values.

Credit union staff would visit workplaces and help employees to become financially stronger, allowing them to arrive at work less stressed about their personal finances.

"While it is reassuring to have a solid financial result, and to be making good progress on our core purpose of helping individuals and families in our communities to become financially stronger, we have still remained [one] of the 'best kept secrets'," he said.

The firm was intent upon its core purpose and found it unacceptable potential members might be missing out because they lacked information.

A review had led to the launch of the "Easy Banking" positioning in July, he said.

An advertising campaign would be undertaken this financial year, he said.

 

 

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