Credit Union Quarterly Statistics – Q3 2021

The Bank of England collates the data from credit unions’ quarterly returns to produce a statistical release on the UK credit union sector for each quarter. Due to the time taken to submit and process the returns data, it takes around 6 months for the data to be published.

Based on the data collected by the Bank of England, this briefing presents a range of statistics for the third quarter of 2021 for credit unions in Great Britain (which excludes Northern Ireland). Provided below are the headline statistics for the British credit union sector, followed by charts showing the trends for the sector over the last 5 years.

Key Statistics for the British Credit Union Sector in the third quarter of 2021

Credit unions (returns submitted): 258

Total Members (including juniors): 1,397,583

Total Assets: £2.26 billion

Total Shares: £1.95 billion

Total Capital: £253 million

Total Loans: £1.06 billion

Quarterly Income: £37.1 million

Quarterly Expenditure: £31.9 million

Quarterly Profit/Loss: +£5.21 million

Trends in the British Credit Union Sector over the Last Five Years

Number of Credit Unions: For the third quarter of 2021, the amount of credit unions in Great Britain that submitted a quarterly return was 258, which is 8 lower than the previous quarter. This quarterly change fits with the ongoing decrease in the total number of British credit unions. The fall in the number of submitted returns is likely due to a combination of credit unions merging, winding down, or submitting their returns late.

It must be noted that the total number of credit unions may not be reflected by this figure, as the true number of credit unions may be higher due to late submission of returns. Once any late quarterly returns are received, the data for previous quarters will be corrected by the Bank of England in future statistical releases.

Total Number of Credit Unions Members: The total membership of British credit unions decreased by 1.5% to 1,397,583 in the third quarter of 2021 from 1,417,213 in the previous quarter. This figure is inclusive of both adult members and junior depositors.

It cannot be discerned from the data how much of the decrease in member numbers is due to late returns submissions, credit unions winding down or from closed member accounts. Nevertheless, there is a clear trend of decreasing total membership numbers in the sector since the beginning of 2020.

Average Number of Credit Unions Members: Despite the decrease in total member numbers, the average number of credit union members increased to 5418 in the third quarter of 2021 from 5327 in the second quarter, representing a rise of 1.7%.

There is a clear trend of growth in the average credit union membership size, which is to be expected given the frequency of mergers in the sector. As a result, it is difficult to say how much of the increase in credit unions’ average member base is due to organic acquisition of new members and how much is directly due to mergers.

Total Value of Loans: The total value of credit union loans increased by 3.06% to a total of £1.063 billion between the second quarter and the third quarter of 2021. This represent is a strong increase in credit union lending that is highly encouraging, given the sector’s struggle to maintain the level of lending to members throughout the Covid-19 pandemic.

Total Shares: The total of credit unions shares in credit unions continued to have strong growth in the third quarter of 2021, with the total increasing to £1.95 billion, up 2.7% compared to the previous quarter. This figure includes both non-deferred member shares and deferred shares in the credit union.

Total Assets: Credit unions’ asset base continued to grow in this period, with the value of total assets increased between the second and third quarters of 2021 by 2.5% (£56.0m).

Loans to Assets Ratio: The total loans to assets ratio for credit unions increased to 47.1% in the third quarter of 2021 from 46.9% in the second quarter. Though this increase is small, it is encouraging given the significant decrease in the loans to assets ratio seen throughout the Covid-19 Pandemic.

Total Income, Expenditure and Profit: British credit union’s total surplus in the third quarter of 2021 was £5.21m.

The following changes were seen across the sector in the third quarter of 2021 compared to the previous quarter.

Change in Total Income: 6.2%

Change in Total Expenditure: 6.3%

Change in Total Profit: 6%

Arrears to Loans Ratio: The arrears to loans ratio across the sector dropped to 7.02% in the third quarter of 2021, from 7.79% in the previous quarter. The large decrease in the arrears to loans ratio is a highly positive, with arrears at their lowest level compared to the total loans value since the beginning of the Covid-19 pandemic.

Total Capital: The total value of capital across the sector increased by 3.8% (£9.24m) between the second and third quarters of 2021, in keeping with the continuous trend of growth in total capital reserves across the sector.

Capital to Assets Ratio: The capital to assets ratio increased to 11.21% in the third quarter of 2021 from 11.08% in the second quarter. This is a highly positive change, representing the first quarterly increase in the capital to assets ratio since in the last quarter of 2019, almost two years prior to this quarter.

Liquidity: The total liquidity ratio for the sector decreased slightly to 30.3% in the third quarter of 2021, compared to 30.8% in the second quarter. Despite the small increase for this period, credit unions maintained a high level of liquidity on average for the third quarter of 2021, meaning there may be room for a higher amount of credit unions’ cash to be invested in longer-term deposits.

Summary

The third quarter of 2021 showed promising signs that the sector has started to recover from the financial impact of Covid-19. This period saw strong growth in lending and the lowest level of arrears since the beginning of the pandemic. Further, growth in capital was greater than the growth in assets for the first quarter since the end of 2019.

Nevertheless, the sector remained in a worse position in the third quarter of 2021 than prior to the pandemic. Both the capital-to-assets ratio and loans-to-assets ratio remained below pre-pandemic levels, with growth in lending far behind the growth in assets seen over the past two years. Further, the total membership levels of the sector has continued to dwindle and decrease overall throughout 2020 and 2021.

If you have any questions, comments or suggestions based on this briefing please contact policy@abcul.org.