Tuesday 21 November 2017

One-fifth of all credit union loans are now in arrears

Regulator for the credit union sector, Sharon Donnery
Regulator for the credit union sector, Sharon Donnery

Charlie Weston Personal Finance Editor

LARGE chunks of the loan books of credit unions are not being repaid, but there is some evidence of an improvement in the arrears situation.

Regulator for the sector Sharon Donnery  told credit union managers yesterday that 20pc of the value of all loans were in arrears.

The value of credit union loans has fallen by 11pc to €4.6bn for the 400 credit unions in the State up to June last year.

This means that the value of arrears is €920m.

Ms Donnery said: "Average sector arrears were slightly over 20pc."

The overall arrears figure had been higher, at close to €1bn in 2011.

But a fall in the overall value of all credit union loans has meant the euro value of the arrears is down.

Loans are maturing faster than new ones being taken out, as people are taking out fewer loans because they fear that lower incomes and higher state taxes and charges mean they will not be able to repay credit union borrowings.

Ms Donnery said: "Credit unions continue to face significant challenges to their business model."

Average dividends, or interest paid on savings, were below 1pc last year, the credit union registrar told the Credit Union Managers Association.

She said credit unions remain trusted and valued by their members.

Credit unions were encouraged to explore mergers with other community lenders.

Ms Donnery told the managers: "While I understand many of you have questions about restructuring, and indeed concerns, I would urge you to see it as a positive with the potential to build a strong and relevant credit union sector for the future."

Irish Independent

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