Update on the financial condition of the Credit Union sector

• Report on financial conditions of credit unions released
• Positive trends in the areas of new lending, reduction in reported arrears and an increase in overall reserves
• Challenges remain – Deteriorating cost to income position, low loan to asset ratio and return on assets

The Central Bank of Ireland today publishes the third report on the financial condition of the credit union sector (PDF 937.66KB). Data focuses on trends in the period 31 March 2013 to 31 March 2018, including analysis by credit union asset size and common bond type. The primary focus of this publication is to provide analysis of data to credit unions to support them in analysing their performance alongside the sector and peers.

The report notes that total sector assets now stand at a record high of €17.2bn. 53 credit unions with assets of €100m or greater now account for 55 per cent of total sector assets. Total sector loans amount to €4.5bn, while the average sector loan to asset ratio, a key measure of viability, has remained at 27 per cent since March 2016, having fallen from 35 per cent at 31 March 2013. Savings continue to outpace loans, with sustained annual growth since 2014. Total savings across the sector today amount to €14.3bn.

Income for the six months to 31 March 2018 continued to trend downwards. A reduction in investment income is a key driver of the decrease in income and reflects the low interest-rate environment. Provision write-backs and bad debts recovered have had a positive impact on overall income since 2015. However, this cannot be relied upon in contributing to future income.

Commenting on the report, Registrar of Credit Unions Patrick Casey said:

“The report reflects the continuing challenging business environment for credit unions. It is one of a number of regulatory supports for credit unions in terms of performance benchmarking, and together with supervisory engagement, seeks to help credit unions in building strong core foundations in the areas of governance, risk management and operational capability. Other 2018 supports include the launch of the CEO Forum and Credit Union Workshops, together with topical sectoral publications, including the 2017 supervisory commentary, thematic reviews and sectoral guidance, most recently in relation to loan provisioning.”