2021 was a test of resilience for businesses, communities and individuals for Australia’s mutual banks, building societies and credit unions – also referred to in this report as ‘the mutuals’.

On the one hand, the country and the Australian mutuals industry have felt the ongoing impact of the COVID-19 pandemic with its public health consequences and lockdowns.

On the other hand, the surprisingly strong performance of the Australian residential housing market (in combination with relatively high liquidity levels for many lenders in the sector) has boosted the lending performance of the mutuals.

Financial highlights: Australian mutuals in numbers

The results of the mutuals industry in Australia for 2021 tell a story of resilience and of purposeful growth.


▲ 38.6%

Operating profit before tax
increased by 38.6% to $685 million

▲ 5.1%

Lending grew by 5.1%
to $112.4 billion

▲ 8.1%

Deposits grew by
8.1% to $117.2 billion

▼ 3.75%

Non-interest income decreased
by 3.75% to $412.5m

▲ 2bps

Net interest margin increased
by 2bps to 1.81%

▼ 140bps

decreased by 140bps to 77.9%

▼ 37bps

Average capital adequacy ratio
decreased by 37bps to 16.29%

▼ $29.4m

Write back of credit provisions
of $29.4m

► 2

2 mergers were completed
in FY21

Survey responses: Australian mutuals insights

In words: Australian mutuals insights based on our survey.

78.1% of respondents feel confident about the 3 year growth prospects for mutuals.

Top 3 priorities for the next 3 years are: maintaining profitable and sustainable growth, digital transformation and keeping up with pace of change (e.g., regulatory change, fintech, open banking, NPP)

Top 3 biggest risks are: low interest rate / margin environment, information technology including cyber risk and regulatory compliance

Top 3 key technology challenges in the next 3 years are: cyber security, channel digitisation and innovation.

24.4% of respondents anticipate being involved in merger activity during 2022.

2021 has seen a shift in intentions around business transformation, with respondents indicating a significant increase in the focus on full end-to-end transformations and ancillary systems transformation compared to 2020.

Over 70% of respondents believe ESG is an important area for their organisations, but they are not looking to go above and beyond; while high importance was placed by more than 26.8% respondents on this area, which is regarded as a way to differentiate themselves.

Top 3 contributors for growth are: customer service, product pricing and customer centricity & product innovation.

9 themes for the Australian mutuals sector

As we look towards the next 3-5 years, we have identified some core topics that must remain front of mind
for boards and executives as they continue their purposeful growth in mutual banking.

Download the short point-of-view articles covering these key themes from our report below.

Feature interview with COBA  >

Interview with Michael Lawrence (CEO of Customer-Owned Banking Association) about the role of mutual banking in the financial system, its relevance into the future and sector consolidation.

Customer value proposition

Strength of the mutuals’ customer value proposition (based on our customer survey) and implications for future-proofing and response to generational shifts.

Download the PDF  >

Digital technology transformation  >

Roundtable discussion with Salesforce, Thought Machine and nCino on the mutuals’ move towards a digital transformation and personalisation-led services.

 ESG issues

Implications of the increasing importance of environmental, social & governance (ESG) focus and practice in the Australian mutuals industry.

Download the PDF  >

Mortgage lending

The future of mortgages lending and implications for mutuals.

Download the PDF  >

Regulatory change

A thematic view of the complex regulatory agenda for the future and how to overcome compliance challenges.

Download the PDF  >

Capital management

Capital management within the mutual banking sector and the impact of a low interest environment.

Download the PDF  >

Technology-enabled finance

The rise of finance technology, backed by AI and machine learning, is driving process automation and efficiency.

Download the PDF  >

Mergers and acquisitions

Observations on mergers and consolidation amongst the Australian mutuals industry. Are they an effective way to achieve cost efficiency and capital savings?

Download the PDF  >

Mutuals webinar

More information

Mutuals Industry Review 2021

Read more about KPMG's Mutuals Industry Review 2021. 

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