Statement in Response to Central Bank of Ireland’s Financial Conditions of Credit Unions

Posted on: 19 Dec 2018

The Irish League of Credit Unions (ILCU) today notes the publication of the Central Bank of Ireland’s report; Financial Conditions of Credit Unions: 2013-2018.

The ILCU welcomes the Central Bank’s observation of the continued growth in new lending and a sustained reduction in arrears across the credit union movement.

Credit unions affiliated to the ILCU are in a positive financial position, having experienced strong lending growth in 2018, for the third consecutive year. Lending increased by €289 million (7.4%) year on year (figures accurate to end September 2018).
 
There was continued and significant progress on arrears among our affiliated credit unions in 2018, with loan arrears falling for 27 consecutive quarters, and down a significant 78% since December 2011. In addition, with the average credit union capital ratio at 16.4%, credit unions are well positioned to withstand additional financial stresses. Overall ILCU credit unions hold €985 million in excess capital above the 10% requirement.
 
A challenge that remains for credit unions, as noted by the Central Bank in its report, is return on assets constrained by low interest rates. However, there is some evidence for ILCU affiliated credit unions that this drop in investment income is falling, and loan income is catching up.

Growing the loan book continues to be a priority. To this end, the ILCU has recently set up the Home Loans CUSO service, which provides operational support to affiliated credit unions in the processing and fulfilment of residential mortgages, based on a standardised, consistent and reliable methodology. To date, 11 participating credit unions have gone live on the service, with mortgage applications being processed. This on-boarding process will continue into 2019.
 
2018 Credit Union Statistics At A Glance
 
Number of credit unions: 240
Membership: 3.1 million (+2% year on year)
Assets: €15.5 billion (+5.1% year on year)
Loans:  €4.2 billion (+7.4% year on year)
Gross Arrears Ratio: 4.9% (-19% year on year)
 
Please note all figures quoted relate to ILCU affiliated credit unions in ROI only, and are accurate to year end September 2018.