Mutual banks, credit unions and building societies fared better on asset growth and member growth over the 2015 financial year, but conservatism may be hampering the sector.KPMG, in the annual review of the sector, said capital levels remained "unnecessarily high" at 17.8 per cent across the 60 mutuals covered by the survey, albeit down from 18.1 per cent in 2014.This capital ratio "results in capital that is not being effectively deployed to fund productive capacity in the Australian economy," KPMG said. Peter Russell, national mutuals leader for KPMG Australia, was the lead author of the report.Major banks, by comparison, have an average capital ratio of 13.4 per cent.The KPMG mutuals survey provides no simple view of their financial health, with key measures over the year to June both better and worse than the year before.Net profit increased by 3.5 per cent, following a fall of 1.5 per cent the year before.But the return on equity fell to 5.9 per cent from 6.1 per cent, even as the capital ratio declined. The cost to income ratio also lifted to 80 per cent from 79.4 per cent.