StateWest Credit Society, the State’s third largest non-bank lender, has reported a 49 per cent increase in underlying profit for the year to June 2004.
Profit before tax and abnormal items was $9.7 million, excluding a $1.1 million gain from the sale of land and shares that had been owned by merger partner Health Services Credit Union.
In the previous year, profit before tax and abnormal items was $6.5 million, excluding a once-off gain on the merger with Health Services.
The StateWest result compares with the $10.7 million pre-tax profit reported last week by arch rival Police & Nurses Credit Society, which was affected by investment in its land development activities.
It also coincides with Wizard Home Loans opening another two branches in Western Australia, at Busselton and Bullcreek.
Wizard now has 11 branches in WA, has committed to opening new branches in Karratha, Port Hedland and Broome, and has a target of 20 by the end of June.
Wizard’s head of sales WA, John Duncalf, said the group had seen a “surge in demand” to join its network.
“The key to our success is a bricks-and-mortar branch presence that serves as a community focal point and reassures borrowers,” he said.
StateWest chief executive Greg Wall attributed its improved result to the society’s focus on core activities.
“Our profit is a further endorsement of StateWest’s business model, which is predicated on exceptional customer service, well-trained employees and community involvement,” Mr Wall said.
StateWest achieved solid growth during the year, with its total loan portfolio increasing by 12.7 per cent to $579.2 million.
In addition, securitised loans and other loans managed by StateWest, which are not on its balance sheet, more than doubled to $132.8 million.
Following the Health Services merger, StateWest is currently implementing a merger with the much smaller Breweries Union Credit Society.
To support further growth, StateWest is planning to open its 16th branch later this year in Mandurah and is on the lookout for further sites. Mr Wall said the society had also continued to use telephone and Internet technology.
A new online savings account launched during the year had been “very successful”, Mr Wall said.
StateWest’s cost-to-income ratio, a key efficiency measure, was cut to 69.5 per cent, putting it ahead of most other non-bank financial institutions.
The society received its first dividend from its $2 million investment in Gold Estates Australia (1903), the developer of the Thompson’s Lake sub-division in Perth’s southern suburbs.
Mr Wall said StateWest would consider further property investments in partnership with other groups but would limit its exposure.
“Our core focus is banking. We don’t want to be a property developer by default,” he told WA Business News.
This approach distinguishes StateWest from the likes of Home Building Society, which has extensive property activities, and Police & Nurses, which is increasing its involvement in land development.
Mr Wall said another area of cautious diversification was its financial planning business, which has focused to date on retirement planning but in future would also target planning and budgeting for younger customers.
