Credit Union 2020 Statistics – Decade Review

The Bank of England publishes aggregate data every year based on credit unions’ annual returns. Due to the time taken for credit unions to submit and the Bank of England’s statistics team to process the information it takes approximately 6 months for the data to be published. The data presented below was published on 31 July 2021 and is for the year ending 2020. Below are the headline figures for Great Britain (excluding Northern Ireland), along with charts covering the previous 10 years worth of data from 2010-2020.

Headline statistics for Great Britain

Credit unions (returns submitted): 263

Total Members (including juniors): 1,355,630

Total Assets: £1.95 billion

Total shares: £1.68 billion

Total Capital: £210 million

Loans: £987 million

Income: £141 million

Expenditure: £124 million

Profit / loss (quarter): £17 million

Great Britain – Movement over the years 

ABCUL has plotted every years results since 2010 to provide a picture of how things have changed over the last decade. If you have any questions, comments or suggestions please contact the policy team policy@abcul.org

Comment: The number of credit unions continue to fall, and have been on the decline since the number of credit unions in Great Britain peaked at 698 in 2001. Credit union numbers have fallen 45% since 2010 and this trend shows no sign of slowing down with the largest percentage drop of credit unions in 2020 since 2003. However, it is possible that due to the coronavirus pandemic there has been higher than usual delays to the submissions of annual returns which is exaggerating this precipitous fall of 35 credit unions.

Comment: Assets continue to grow. In 2020 credit unions accumulated another £213 million (+12%) in assets, the largest increase on record after slowing slightly in recent years such as 2018 where assets only grew by 4.4%. The average assets per credit union has more than quadrupled from £1.7 million in 2010 to £8.1 million in 2020.

Comment: Total membership has declined in 2020 falling 35,000 or 2.6% from the year before, this is the first annual membership drop on record and is no doubt linked to the difficulty increasing membership during the pandemic. Over the decade membership has increased over 52%.

Comment: The number of non-qualifying has increased 82% over the decade but has decreased 5.2% in 2020. Non-qualifying members make up 2.2% of the total membership which is far below the ABCUL rulebook limit of 10%. Since the legislative limit on the number of non-qualifying members has been removed, credit unions can increase or remove the limit on non-qualifying members. Non-qualifying members still need to have qualified through the credit union’s common bond in the first place.

Comment: Loans also decreased for the first time on record by £22.8 million (-2.3%). Over the decade the value of credit union loans has almost doubled from £506 million to £987 million. Despite the overall increase in loans, the average loans per credit union increased from £3.6 million to £4.1 million due to the reduction of credit unions.

Comment: The loans to assets ratio fell dramatically in 2020 from 58% to 50.5% which is the largest decrease on record.

Comment: The number of staff employed has fallen by 129 in 2020. This is not the first time we have seen a reduction in staff numbers which peaked in 2016 at 1,800. Whilst the sector is becoming rapidly more professional in nature, the heavy consolidation of credit unions discussed above has impacted numbers of staff working in the sector. The average number of staff employed per credit union has increased from 3.1 in 2010 to 6.9 in 2020, this is higher than 2016 where the average number employed was 5.7.

Comment: Income and expenditure have both experienced similar growth over the period, whilst interim profits have remained relatively flat. In 2020 credit unions saw an increase of income during the pandemic due to the significant increase in grants received in the period (graph later).

Comment: The number of arrears has increased over the last decade from 24,800 to just over 60,000 (+142%). 2020 saw a significant increase of 15% which is the highest since 2016 (+18.2%).

Comment: The total value of loans in arrears has increased £58 million over the last decade or 276%. However, the increase of £30 million in 2020 is unprecedented and represents over half of this value in one year alone. The average credit union had £330,000 in 2020 in arrears compared to £180,000 in 2019.

Comment: Overall we see the average loan value in arrears increase over the decade from £1,900 to £2,400 (+26.7%).

Comment: After reviewing the above, it will not surprise you to see another unprecedented rise in the arrears to loans ratio from just under 5% to over 8% in 2020. The arrears ratio has almost doubled during the decade.

Comment: Despite the difficult year for credit unions, capital has increased in absolute terms over the last year as it has the last decade.

Comment: On the other hand, credit unions capital to assets ratio has fallen due to credit unions accumulating shares and deposits at a much higher rate than capital. However, this remains above 10%.

Credit unions on aggregate exceed the highest capital requirement (8% +2% buffer), however, as capital is unevenly distributed across the sector it remains a significant challenge for many credit unions.

Comment: Grant income for the sector has halved since 2010, however, during the coronavirus pandemic credit unions saw a surge in grant funding as various avenues of relief were made available such as the furloughing scheme, business rates relief, economic resilience funds and additional grant funding from devolved governments and Fair4AllFinance. The average credit union received £34,000 in grants in 2020 compared to £14,700 in 2019.

Comment: Liquidity has overall fallen over the course of the decade from 47% to 39%. This is in spite of a fall in the loans to assets ratio which suggests that credit unions have been making further use of investments to reduce their liquid funds over the last 5 years.

Conclusion: The trend of assets outpacing membership and loan growth is clearly evident on the above graph and accelerated in 2020 with credit unions seeing the first real fall in members and assets alongside accelerated deposit-taking.

The pandemic has no doubt hugely impacted these figures however, some of these figures are exacerbated versions of existing trends such as slowing membership growth. Membership generally increased by high single digits percentages in the first half of the decade and low single digits in the second half. Loan growth however in 2019 was very positive with the 2nd highest percentage growth of the decade and the £87 million increase was the highest on record. The quarterly statistics which ABCUL also provides briefings on has shown that 2020 has been a year of two halves and that credit unions did begin to recover in respect of lending and membership in the latter half of 2020. Further statistical releases will show to what extent this recovery continues into 2021.

For many credit unions the silver lining from 2020 has been the acceleration of the digitalisation of services and remote working necessitated by lockdown requirements. It is likely that the next decade of credit union growth will require credit unions to provide remote and digital services that are relevant and meet the needs of new and existing members.

If you have any questions about the figures above or any requests for areas you would like to see covered in future please contact policy@abcul.org.