DUBLIN, Ireland–A new report from Ireland’s Central Bank sees ongoing challenges for the country’s credit unions in generating income and building ROA, but also says CUs continue to have a strong overall reserves position.
The report from the Central Bank, which regulates credit unions, shows credit unions' total investments increased by 58% from 2011 to 2019 to €12.5 billion, mainly due to increased member savings.
But low investment rates are hurting CUs, with the average return on investments steadily declining from 3.1% in September 2012 to 0.9% by September 2019, the Central Bank said.
The number of credit unions overall has reduced since 2011, falling from 406 to 241 to date in 2019.
The Central Bank data show the country’s credit unions continue to serve most of its citizens, with combined CU membership of about 3.4 million in a country of 4.8 million.
Asset Growth
Despite the reduction in the number of credit unions, total assets also continue to expand, growing by 31% from €14 billion in 2011 to €18.3 billion this year, the Central Bank said.
Yet Ireland’s credit unions continue to struggle with lending, with the report showing the loan-to-asset ratio average among Ireland’s credit unions is just 28% even as the Central Bank also found the sector's cost-income ratio has risen from 46% to 86% between 2011 and 2019.
In a statement to RTE, Registrar of Credit Unions Patrick Casey said the significant challenges are likely to continue.
"Going forward, as those challenges will likely persist, credit unions need to take greater ownership of their business model development in order to achieve sustainability for members," Casey told RTE. "Irish credit unions continue to enjoy the loyal trust of members. This trust, coupled with the sector's co-operative member-centric ethos, remains a competitive difference upon which to evolve business models and meet ongoing commercial and competitive challenges.”