18 June 2012 7:13am
People's Choice Credit Union, in South Australia, received a long-term credit rating of BBB+ and a short-term rating of A-2 from Standard & Poor's on Friday. The credit union is the second largest in the sector, with A$6 billion in assets.
S&P based the rating on the mutual's geographic concentration, very strong capital and earnings, adequate risk position, below average funding and adequate liquidity.
S&P said an upgrade to this rating "would require a steep change in People's Choice's business position, and this would need to be supported by a material improvement in diversification, which would see a significant increase in the credit union's size and market share."
People's Choice is the result of the merger, two years ago, of Australian Central and Savings & Loans (both Adelaide-based).
Peter Evers, managing director of People's Choice, said on Friday that both former credit unions had ratings, but that the initial phase of the integration "was not a good time" to work on an updated rating.
Of present trading conditions on the liability side, Evers said they were "very challenging. We are seeing extreme competition in term deposits. The majors are holding TD rates up. We're feeling that.
"We're getting good traction with the rates we've got, and getting good business on the other side as well."