P&N suffers fallen profit

Western Australia’s largest non-bank financier, Police & Nurses Credit Society, has attributed a rare drop in profit to planned investment in its expansion.

P&N this week reported a net profit of $7.7 million for the year to June, 2004, down from $10 million in the previous financial year.

Chief executive Fred Huis said it was only the second fall in the past 22 years and he was confident the group would bounce back strongly in the current financial year.

“Activity in our core areas remains strong, notwithstanding the fact the housing sector has pulled back a touch,” Mr Huis said.

“We expect the society’s profit in the 2005 financial year will exceed $10 million.”

Mr Huis said the group’s property development activities had been a drain on profit last year.

It was continuing to expand its 84-unit retirement village but was unable to recognise income until current leases expired and were purchased by new residents.

In addition, its residential housing sub-division at Two Rocks was affected by delays in gaining planning approvals.

P&N’s performance last year was also affected by new lending policies.

Mr Huis said the society had decided to “slow down tremendously” the growth in commercial property loans.

“It was becoming out of proportion to our core credit union business,” he said.

The society also decided to slow the growth in “low deposit” and “no deposit” housing loans.

These policy changes meant that loans to members grew by 6.2 per cent to $649 million, well below national credit growth of closer to 20 per cent.

The society achieved faster growth in deposits, which were up 11.1 per cent to $791 million.

Mr Huis said the society “radically changed our approach to transactions” during the year.

Members wanting to withdraw cash must now use either an ATM or a giroPost outlet.

The branches would focus on providing services like insurance, lending and financial planning.

He commented that the competitive landscape had changed.

Customer surveys traditionally showed the Commonwealth Bank and BankWest as the main competitors but “we see awareness of ANZ coming up much more”.