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Police & Nurses Limited (PNL) finished the year with a Group profit after tax of $16.7m off the back of above system growth in both deposits and lending, leveraging its two customer-owned banking brands, P&N Bank (WA) and bcu (NSW and Qld).

Announcing PNL’s annual results, CEO Andrew Hadley said the Group’s prudent approach during a period of economic uncertainty had positioned the P&N Group well in 2021, finishing the year with total assets of just under $7 billion.

“Following our maiden consolidated results as a merged entity last year, the 2021 financials bounced back, noting the comparative results for the Statement of Profit and Loss for 2020 only represented eight months of consolidated performance post the November 2019 merger with bcu,” said Mr Hadley.

“With our first merger now successfully complete, this year’s operating costs included over $3 million of system integration costs that were treated as once off.

“Our response to the COVID-19 pandemic included a number of initiatives such as payment deferrals and suspension of certain fees. Pleasingly, over 90% of members who were on loan payment deferrals resumed full repayments with a small number being assisted through hardship arrangements.

“With this in mind, the Group released around half of the COVID-19 impairment provisions that were raised last financial year. Given the ongoing uncertainty being caused by the Delta strain of the COVID-19 virus, the Board considered it prudent to retain a significant provision in excess of $5 million.”

The Group raised a further $3 million specific impairment against the exposure to the Two Rocks development, and management continue to focus on the options available to maximise member value in exiting this non-core asset.

During the year, the Group sold the operating assets of P&N Financial Planning (PNFP) amid escalating regulatory obligations which make ownership a complex and specialised proposition. The disposal of PNFP for $2.8 million resulted in a profit on sale of $1.9 million, against which $1.5 million of goodwill was impaired.

Our strong momentum has positioned us well for a major strategic transformation that commenced in recent months. Over the next few years, we will be replacing outdated legacy banking systems, processes and products that no longer deliver a modern integrated experience. We will also develop and leverage more personalised solutions that provide greater digital enablement and self-service capability for our members, our brokers and our business partners.

“Alongside our transformation program, we plan to leverage further inorganic growth opportunities. As banking is now irrefutably a scale game, ever-increasing investments are required in specialist skills, sophisticated technology, cyber security, as well as digital and data solutions. This is best achieved with size and scale,” Mr Hadley added.

“While the future for the Australian customer-owned banking sector remains positive, further industry consolidation is inevitable evidenced by the two recent merger announcements by four of the top six customer-owned banking groups in Australia.

“With the merger of P&N Bank and bcu, we have built a unique multi-brand model and are actively looking for opportunities to bring more like-minded customer-owned banking partners into the Group.

“Our multi-brand solution respects the heritage, identity and community presence of our banking brands, provides localised decision making and optimises the shared services and systems of the Group in the back office functions such as risk, finance and information technology.

“As we look forward to and hope for a more certain future and a more predictable operating environment, we will continue to stand by our members and staff to provide whatever support we can during these challenging times.”

Summary of FY 20/21 results

  • Net profit after tax of $16.7 million.
  • Net interest income increased to $130 million.
  • Total loans under management increased 6% to $5.36 billion.
  • Total deposit balances increased by 10% to $5.47 billion.
  • Non-interest revenue and other income increased 20% to $17.5 million.
  • Reversal of credit impairments of $4.1 million.
  • Total assets increased 12% to $6.93 billion.
  • Total members’ funds increased to $461 million.
  • Capital position remains healthy ending the year at 14.10%.
  • Total membership numbers stand at 164,138.

 Download Police & Nurses Limited 2021 Annual Report - PDF (2.5MB)