CUA's first-half profit has slipped 19.8 per cent to $23.07 million after Australia's largest credit union absorbed rising funding costs rather than pass them on to its members.
Credit Union Australia added 17,000 new members over the six months to December 31 and grew new lending 78.9 per cent on the prior corresponding period to $2.29 billion.
The growth in lending outpaced retail deposit growth, increasing CUA's need for wholesale funding, chief executive Rob Goudswaard said on Friday.
"While strong growth in lending and deposits is positive, it does have a ripple effect in terms of increasing operational costs," Mr Goudswaard said.
Despite the housing market's downward trajectory in most mainland capital cities, CUA's loans under management grew to $13.26 billion, an increase of 7.2 per cent over the half - three times the system rate.
Retail deposits grew 5.5 per cent over the period to $9.73 billion.
Mr Goudswaard said showed the result showed CUA, whose CUA Health unit was hit by investment and equity market volatility, was prioritising future growth and members' long-term interests over short-term profits.
He contrasted CUA's structure with that of the ASX-listed big banks hauled across the coals for various misdemeanours at the financial services royal commission.
"In the context of the royal commission and the cultural behaviours it highlighted, Australians are clearly looking for an alternative that empowers them by placing the control of their finances back in their hands.
"CUA is owned by our members, not shareholders, so we put the interests of our members at the heart of everything we do."