Credit Union Australia (CUA) has achieved a record annual profit but warns the year ahead will be challenging due to fierce competition sparked by low interest rates.

CUA, Australia's largest customer owned financial institution, made a net profit of $57.5 million in the 2012/13 financial year, up 13 per cent from the previous year.

Chief executive Chris Whitehead said the business environment and housing market was challenging and sluggish, making the annual result a strong one.

He expects the credit union to face more challenges this financial year.

With the Reserve Bank of Australia's cash rate at a record low 2.5 per cent, competition amongst lenders to attract new loan customers will step up, Mr Whitehead said.

"The low interest rate environment will continue to drive fierce competition in the market and like other smaller lenders, we expect this to have some impact on profit margins as we work hard to maintain our pricing advantage against the major banks," he said in a statement.

"The impact of our significant business investment will be felt through the depreciation line and a still recovering property market will also bring further pressures."

The value of the bank's assets would reach $10 billion within the next few months after increasing by 5.5 per cent in 2012/13 to a record $9.96 billion this year, Mr Whitehead said.

There were also increases in the value of its retail deposits, new loans, its overall loan portfolio and interest revenue, he said.

CUA is owned by its 400,000 customers, with profits reinvested back in to the business.

 

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