Credit Union Quarterly Statistics – Q1 2020
Thursday 4 January 2024
The Bank of England publishes aggregate data every quarter based on credit union’s quarterly returns. Due to the time taken to prepare, submit and process the data it takes around 6 months for the data to be published. The data presented below was published on 28 August 2020 and is for the first quarter of 2020. Below are the headline figures for Great Britain (excluding Northern Ireland), along with charts covering the period since Q1 2015.
- Credit unions (returns submitted): 277
- Total Members (including juniors): 1,428,641
- Total Assets: £1.82 billion
- Total Shares: £1.54 billion
- Total Capital: £215 million
- Loans: £1.1 billion
- Income (quarter): £33.5 million
- Expenditure (quarter): £30.6 million
- Profit / loss (quarter): £3 million
Great Britain – Movement over 5 years (Q1 2015 – Q1 2020)
This is the first set of statistics to cross over with the coronavirus pandemic. The UK lockdown started on the 23rd March which was means that this quarter only saw one week’s worth of lockdown trading conditions. We expect the full impact of coronavirus to be much more evident in the next quarters’ returns.
Comment:
We’ve said this for every quarter since we started to publish these figures: the number of credit unions continues to slide. These figures are based on the number of returns submitted which is a reasonable proxy for the number of credit unions but may not be entirely accurate. Credit unions submitting their returns late or on time when they usually do not can skew these figures.
We expect the number of credit unions to continue to drop owing to both the consolidation of existing credit unions and the lack of new credit unions seeking authorisation.
Comment:
Membership growth was negative at 0.4% (-6,000) under the previous quarter but positive 1.2% (+20,500) over the last year.
This means on average, each credit union in Great Britain attracted an additional 75 members over the last year.
Comment:
Loan growth has flattened this quarter growing at just 0.1% compared to 4.5% last quarter. Some of this will be due to the uncertainty experienced in March and loan growth overall is up by 9.2% since the same quarter last year. On average, each credit union lent an additional £321,000 last year.
Comments:
Assets have increased 2.2% (+£39 million) since last quarter and 9.6% (+£159 million) since Q1 2019. This means that the average credit union accumulated an additional £575,000 in assets over the last year.
Comment:
Muted loan growth has meant that the loans to assets ratio has dropped from a 1 year high of 59.2% last quarter to 58%.
Comment:
Profit and loss remains characteristically variable from quarter to quarter, however, the sector tended to make a surplus of between £3 million and £5 million each quarter. This quarter the credit union sector made a £3 million surplus.
Growth since last quarter:
- income: -7.8%
- expenditure: -5.8%
- profit: -24.9%
Growth since last year:
- income: -15.1%
- expenditure: +13.2%
- profit: -7.8%
Comment:
One area which influences the final profit and loss figures is the growth of loans versus arrears. This chart shows that the growth in the value of loans outstripped arrears.
Comment:
However, in percentage terms credit unions are reporting more arrears than at any time in the last 5 years or for any period we have data for. This is likely driven by three factors:
- A real increase in arrears due to either increased risk tolerance or increased unexpected defaults
- Credit unions treating arrears more cautiously than before due poor provisioning leading to a number of credit union failures and the additional regulatory scrutiny on this area over the last couple of years.
- The additional impact of the pandemic on those on insecure incomes or little savings, pushing arrears even higher
At 6.6% arrears to loans ratio does exceed the WOCCU target of 5%, however, credit unions can be run effectively and profitably at higher arrears ratios providing these loans are priced accordingly. The average credit union held £251k of arrears at the start of 2020 up from £238k just last quarter.
Comment:
This graph shows that arrears has more than doubled since Q1 2015 (+148%) whilst loans have only increased by 57% over the same period which explains the significant increase of the loans to arrears ratio above.
Whilst the value of arrears has more than doubled, the number of loans in arrears has only increased 73%, as a result the average value of each loan in arrears has increased from £787 at the start of 2015 to just under £1,130 at the start of 2020.
Comment:
Capital has steadily increased over the last 5 years as the assets of the sector have grown. Credit unions have generally managed to increase the amount of capital held they hold against their assets since 2015 (below).
Comment:
Whilst capital has dipped slightly over the last reported quarter, the average capital held exceeds the highest capital requirement 10% (for those credit unions with £50+ million assets). However, this is not evenly distributed in practice with the vast majority of credit unions, particularly smaller credit unions, holding significantly less.
Of course ABCUL achieved the huge capital lobbying win which was announced at our conference in March. For more information about this see our briefing on the capital changes which were passed as proposed here.
Conclusion:
Overall, the sector had a below par start to 2020 which has already been extremely challenging for credit unions and the economy at large. As these figures show, we are still a quarter away from fully measuring the full impact of the pandemic.
On a more positive note, many credit unions are reporting promising signs of recovery in their lending over the last couple of months. Government grants and in particular the furloughing scheme will have softened the blow for the next quarter’s results which we will report on in a couple of months time. Until then, if you have any questions, comments or suggestions on the below charts please contact Daniel (daniel.arrowsmith@abcul.org / 0161 819 6996)
