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ILCU Statement on Central Bank report on “Financial Conditions of Credit Unions 2021:1"

Posted on: 14 Dec 2021

The Irish League of Credit Unions (ILCU) notes today’s publication of the Central Bank’s "Financial Conditions of Credit Unions, 2021:1”. In particular, we note the acknowledgement of the Regulator that “while 2021 has been another challenging year, credit unions pro-actively managed the operational challenges arising from COVID-19.” Credit unions, as an essential service, remained open to provide services to their members despite the challenges brought by the pandemic.

Today’s report shows that total credit union assets have reached a record high of €19.98 billion at 30 September 2021 – increasing from €15.96 billion at 30 September 2016 and from €19.42 billion at 30 September 2020. This represents an increase of €0.57 billion in the financial year

Unsurprisingly, member savings reported at 30 September 2021 are €0.46 billion higher at €16.79, than those reported at 30 September 2020. Many credit unions have introduced saving caps to manage the inflows of savings, a point noted in the Central Bank report.

Regarding return on assets, the report notes that the average return on assets (ROA) has increased from 0.4 per cent at 30 September 2020 to 0.6 per cent at 30 September 2021, which is a positive and welcome development.

The Central Bank report also notes that the average level of arrears for the credit union sector has fallen since September 2020 to a six-year low of 3.4 per cent at 30 September 2021. The sector average arrears stood at 9.7 per cent at 30 September 2016 and 4.8 per cent at 20 September 2020. Figures for ILCU credit unions show arrears are at 3.1% in Sept 2021, which is below the pre Covid-19 lows and below the overall sector average of 3.4%, indicating proactive arrears management.

Average reserves as a percentage of total assets, have increased marginally from 15.9 per cent at 30 September 2020 to 16.0 per cent at 30 September 2021. The Central Bank notes that this is a “positive trend given the importance of reserves in underpinning member confidence, particularly at times of uncertainty, disruptive change and where sustainability challenges persist.” ILCU credit unions hold €959 million in excess buffer capital above this 10% requirement.

Commenting on today’s report, ILCU CEO Ed Farrell said, “ILCU credit unions remain well capitalised and arrears have been well managed. While the report correctly highlights that credit unions remain “heavily dependent on unsecured personal lending”, the ILCU continues to see an increase in credit unions joining the Home Loans CUSO service with an increase in mortgage activity. As the report points out credit union boards and management need to ensure that strong governance and risk management are in place to support their business model development in order to provide more services to their members. The ILCU will continue to work with and support our member credit unions to achieve this aim.”


The full report is available here