Monday 19 August 2019

Credit Unions becoming more sparse and less profitable new figures show

  • There are 142 fewer credit unions than in 2014
  • The industry’s return on assets is 0.7pc, down from 1.6pc
  • Just 5pc of credit unions have returns on assets of more than 2pc
Stock picture
Stock picture

David Chance

There are fewer credit unions than there once were, but those that remain are getting larger and even less profitable, according to the Central Bank of Ireland’s Financial Conditions of Credit Unions annual report.

There are 142 fewer credit unions than there were in 2014 and of the 246 that survive, just 109 have assets of less than €40mn and more with assets of at least €100mn with those numbers up to 55 from 28 in 2014.

Despite their increasing size and declining numbers, the industry’s return on assets was just 0.7pc, down from 1.6pc on March 31, 2014 and 31pc had returns of less than 0.5pc while 4pc of them had negative returns.

Just 5pc of credit unions have returns on assets of more than 2pc, one eighth the proportion that did five years ago.

Despite the poor financials, the central bank report highlighted their “highly respected brand” and loyalty of members, which it said was a competitive difference when coupled with the “member-centric ethos”.

Credit unions have €18bn in combined assets and house €15bn of savings, while they lend out €4.9bn, investing €12.4bn.

Some credit unions are also heavily exposed to the risks of Brexit.

“Forty-two community credit unions with total assets of €1.98 billion and total membership of c.406,000 are operating in the counties along the border with Northern Ireland,” the central bank said.

Total  credit  union  income was €293 in the six months to 31 March 2019, 90pc of which is loan interest income and investment income.

Expenses across the industry hit €218mn.

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