Bank of England Credit Union Statistics – Quarter Four 2023

Introduction:

The Bank of England gathers information from credit unions’ quarterly reports to create a statistical report about the credit union sector in the UK. However, the process of submitting and processing the returns data takes around six months, which causes a delay in publishing the data.

This briefing is based on the data collected by the Bank of England and presents statistics for the fourth quarter of 2023 for credit unions in Great Britain, except Northern Ireland. The following are the headline statistics for the British credit union sector and graphs that display the sector’s trends over the past five years (Q1/19-Q4/23)

Please remember that this data represents all credit unions that submitted their regulatory returns for the financial quarter. There may be significant differences in financial trends experienced by individual credit unions that are not represented in this data. Additionally, due to some credit unions submitting their annual returns late, the latest quarterly data may be slightly inaccurate.

KEY STATISTIC FOR THE BRITISH CREDIT UNION SECTOR FOR THE FINAL QUARTER (Q4) of 2023

Credit unions (returns submitted): 238

Total Members (including juniors): 1,537,590

Total Assets: £2.67 billion

Total Shares: £2.29 billion

Total Capital: £321 million

Total Loans: £1.74 billion

Quarterly Income: £74.4 million

Quarterly Expenditure: £70.9million

Quarterly Profit/Loss: +£3.5 million

Trends in the British Credit over the Last Five Years:

In the final quarter of 2023, 238 credit unions submitted their returns to the PRA. This is a decline by two from the previous quarter. However, there is a general trend of a slight decline in the number of credit unions in Great Britain, as indicated by the trend line below.

This quarter has seen a small decline in the number of credit unions. The reason for the declining trend could be one of three factors: 1) the continued merging of credit unions, 2) credit unions winding down or up, or 3) credit unions submitting their returns late.

It’s worth noting that the data may not accurately capture all credit unions due to late submissions of returns to PRA. Any later quarterly submissions are then added and corrected by the next quarter.

Total Number of Credit Union Members:

Great Britain’s total members increased to their highest point at 1,537,590, members (including juvenile depositors). This is an increase of 2.2% from the previous quarter and a 6.5% increase from the prior year. With around 32k increase in membership in a single quarter.

Average Number of Members per Credit Union:

As the graph demonstrates, there has been a steady increase in the average number of members per Credit Union. This was calculated by dividing the number of members by the number of credit unions. It is important to note that credit unions do vary a lot in terms of membership size. However, this is more to illustrate the growth of membership as a sector. This is the equivalent of 394 new members per credit union on average. This will be an increase of 3.02% from the previous quarter.

The average membership is 6460.

Total Value of Loans:

The total value of credit union loans in GB has increased by 6.58% from Q3 to Q4 2023. There has been an increase from 1.63 billion to 1.74 billion and around £107m. The continued demand for credit is mostly accredited to the pressure of the cost-of-living crises. Therefore, more people require loans, and people who have already taken loans require them longer.

Total Shares:

Total credit union shares also demonstrate that membership savings grew 1.3% from the previous quarter, with a 18% growth from the previous year. The total share value in Q4 is £2.29 billion, surpassing the last quarter as the largest shares ever held by British Credit Unions. The value total shares demonstrate the financial resilience of credit unions and their ability to have strong position in the mist of the cost of living crisis.

Total Assets:

Total Assets had a 1.2% quarterly growth, a 8.7% increase from the previous year. In the final quarter, the assets equalled £2.67billion, the largest amount ever held by British Credit Unions—a rise of £32 million.

Loan to Asset Ratio:

The total loans to asset ratio for GB Credit Unions has increased to 65.1% from 61.9%  the previous quarter. This is due to the rise in loans being larger than the increased assets acquired.

Total Income, Expenditure, and Profit:

The total surplus of British credit unions in Q4 2023 was £3.48 million. When comparing Q4 to the previous quarter, the following changes were observed across the sector:

– There was an increase in Total Income and Total Expenditure by 17.13% and 15.0%, respectively.

– However, due to a decrease in profits in English Credit Union, there was a 68% decrease in profit for GB Credit Unions. While this is a slightly worrying decrease, it can be attributed to prevailing economic conditions, with a small increase in loan arrears.

There is positive news from the previous quarter (Q3 2023), whereby the growth in profits was 85.8%. This is shows the sector is still going through a turbulent time but overall is still recovering from the pandemic and managing the impact of the cost of living crisis. It is  promising seeing the recovering from the previous pf 65% decrease in interim profits between the previous quarters. Allowing for the year on year interim to be +10% in profit.

Total Arrears:

The total value of net liabilities in arrears increased by 9.6% in Q3-4 2023, a larger increase than the difference between the previous quarters. In Q4 2023, the total arrears stood at £140 million. The graph shows that arrears have been rising over the past five years. This figure is reflective of the turbulent and financially straining times many households are continuning to face, where many households are having to borrow to tackle the ongoing cost of living crisis.  More people are financially vulnerable and struggling to repay their debts. This could also be the case of “bad” loans being issued, which highlights the importance of Credit Unions  undertaking thorough due diligence and affordability assessments when issuing loans.

Arrears to Loans Ratio:

The arrears-to-loan ratio demonstrates in terms of the loans given out how much is in arrears (repayment has been missed on one or more occasions). The graph shows a gradual increase since the pandemic; however, in the previous few quarters, there appears to be a decline in the ratio. There has been an increase in the A:L ratio of around 2.8%. This ratio has been moving continually from quarter to quarter between 7 and 8% for the past year.

Total Capital:

Total Capital has slightly plateaued £321 million in the final quarter of 2023. This is a decrease of 0.3%.

Capital to Asset Ratio:

There was an increase in the capital-to-asset ratio to 12.22% from 12.09% in Q2-3 2023. This has now surpassed the previous quarter as the highest percentage recorded.

The recent increase in capital compared to assets is a positive sign of credit unions’ financial health. It shows that credit unions are recovering from the economic impact of the Covid-19 pandemic and getting back on track.

Liquidity:

The percentage of total credit union assets for the British sector for the final quarter was 22.4%. The graph shows that the liquidity ratio has been quite erratic for the past five years. Showing a small decline in the subsequent two quarters.  This is due to exogenous changes to interest rates in other financial institutions such as Banks or building societies. Therefore, members may opt to move their savings.

Summary:

The Bank of England has released statistics for the fourth quarter of 2023 for credit unions in Great Britain, except Northern Ireland. The data reveals that the total number of credit unions decreased from the previous quarter, illustrating there has been a slight decline in the number of credit unions over the past five years. The total number of members has increased to its highest point, around 1.53 million members, which has increased to around 32k from the previous quarter. Which is the biggest quarterly increase since 2017. With a year-on-year increase of 6.6%

Total assets, shares, and loans have also increased, indicating that credit unions are more financially resilient. Total assets increased by 72 million.