One third of credit unions report rise in borrowing
CREDIT unions are seeing a rise in demand for loans after years of stagnation.
And another 10,000 people joined a credit union in the first eight months of this year.
The 354 member-owned lenders that make up the Irish League of Credit Unions said the combined savings were up, loan arrears are down and the majority have millions more euro in reserves than required by the rules.
Lending is the main way credit unions generate returns.
However, the loan books of credit unions have been shrinking over the past few years.
Now there are signs that demand for loans has begun to rise again.
Some 132 credit unions that are members of the league have now reported that they have grown their loan book. The average credit union loan interest rate is 9pc.
In the three months to June an extra €2m was taken out in loans by consumers.
Collectively, the member credit unions of the league have €5.5bn available to loan out.
Chief executive of the league Ed Farrell said: "Thankfully there are also good indications that demand for lending is increasing, and the fall in the loan book has slowed considerably."
The league said the pick-up in lending was due to greater demand for loans, targeted advertising by the sector and the Central Bank easing some of the lending restrictions imposed on a number of credit unions.
He stressed that people were responding to the ongoing closure of bank branches in rural areas by becoming credit union members.
"Confidence in credit unions has again been demonstrated by the fact that the number of members is up to 2.89 million, an increase of almost 10,000 in the last 12 months."
Credit union members now have a combined €11bn in savings, the league said. Most are expected to pay a dividend this year. And loan arrears have hit a six year low, and now stand at €497m. This is down from a high of €925m in 2011.
Total gross arrears have fallen for 14 consecutive quarters in a row and write-offs are also back at 2009 levels.
He added: "Throughout the recession years, which saw the withdrawal of banking services from many communities, credit unions continued to provide local, accessible financial services to their members."