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Connexus : Issue 36
connexus www.abacus.org.au 7 CEO COMMENT ECU Australia board member Clive Skarott has been named Cairns Citizen of the Year for 2011. Curtis Pitt, the local MP for Mulgrave, presented Skarott with his award on Australia Day, referring to him as a man who preferred to work quietly behind the scenes rather than "blow his own trumpet". Over the years Skarott spent lengthy periods on the P&C executives of Edge Hill State School and Cairns State High as president or secretary/ treasurer, passing on his profound knowledge of financial issues to assist these organisations in raising funds to enhance the educational environment for students. His devotion to cricket saw him become involved with the local junior cricket scene where he acted as an administrator, coach and umpire. Many other local community organisations benefit annually from his readiness to audit their books free of charge. During his time as chairman of the Cairns Port Authority, Skarott oversaw significant expansion of Cairns Seaport and Cairns Airport. He is a former chairman of Ports Queensland and a patron of Advance Cairns. Skarott has also been influential in Queensland and the nation through his work in the credit union movement. He was active in establishing the ECUA (formerly the Electricity Credit Union) and was CEO of ECUA in Cairns from 1989- 2009. In addition, his involvement with Credit Care Australia has seen credit unions open in many small communities where the major banks have withdrawn their services. Good news for mutuals This is shaping up to be an exciting year for mutuals. Unhappy bank customers are voting with their feet, leading to our market share in new mortgages growing to almost 11 per cent. Customer satisfaction with credit unions and mutual building societies continues to lead the market. Our industry closed the 12 months to December 2010 with its highest ever profit annual NPAT, according to APRA, and achieved 10 per cent growth in assets without compromising the strong and conservative capital base and credit standards that mutuals hold dear. And the contribution that the mutual banking sector makes is receiving greater respect, with government turning to the mutual alternative in its efforts to increase competition. Against this backdrop Abacus has christened 2011 a year of 'Optimism & Opportunity' for mutual financial services. There are plenty of reasons for optimism: good performance, sound fundamentals, real value to members, and genuine community connections. Opportunities are also plentiful: consumers hungry for more competition, improved awareness from the industry campaign, frustrated policy makers and markets and a community desire for services delivered professionally, personally and with principles. We're excited about the competitive difference, the community benefits and the member value that mutuals will deliver through the coming year. Of course there are still plenty of obstacles. Funding costs and wholesale funding options remain restricted, placing constraints on growth. Competition in our core funding market -- deposits -- remains intense. Any cut in the deposit guarantee will hurt us compared to big banks. Basel III and an increasingly conservative regulatory environment creates the risk of mutuals as "collateral damage" as the excesses of the GFC are reined in at a global level. Our market is dominated by very large institutions who are leaders in their field -- and have the budgets to show for it. Within our own sector we'll have new issues with the expected emergence of mutual 'banks' within our ranks as some larger credit unions consider this re-branding, which we must use as a chance to build recognition and unify rather than create division or exclusion. As well, our strong industry averages do hide a disparity in performance with a small group of mutuals outside the sector's general growth and returns; and clearly we need to improve our delivery in terms of operating costs. But mutuals have a great track record of meeting challenges head on. The same initiative and innovation that has seen the mutual banking sector grow to $77bn in assets and over four million members will help us respond to the challenges ahead while also taking prudent, thoughtful but ambitious action. Optimism and opportunity will be the hallmarks of 2011. Like me, I am sure all in our industry are looking forward to making the most of these interesting times to deliver more benefit, more choice, and more community- based services to Australians. Louise Petschler, CEO, Abacus CEO comment Clive Skarott honoured