Credit Union Quarterly Statistics – Q4 2018

The Bank of England publishes aggregate data every quarter based on credit union’s quarterly 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 approximated 6 months for the data to be published. The data presented below was published on 31 April 2019 and is for the final quarter of 2018. Below are the headline figures for Great Britain (excluding Northern Ireland), along with charts covering the previous 5 and a half years worth of data.

Headline statistics for Great Britain

Credit unions (returns submitted): 283

Total Members (including juniors): 1,372,416

Total Assets: £1.63 billion

Total shares: £1.37 billion

Total Capital: £196 million

Loans: £969 million

Income (quarter): £30.8 million

Expenditure (quarter): £27.1 million

Profit / loss (quarter): £3.7 million

Great Britain – Movement each quarter

ABCUL has plotted every quarter’s results since Q2 2013 on 12 graphs which should provide a picture of how things have changed over the last five and a half years.
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Comment:

The number of credit unions has been consistently on the decline since 2001 (when number of credit unions peaked at at whopping 698). Credit union numbers have fallen by over 40% over the last decade and this quarter continues that trend. The number of credit unions returns submitted fell by another 10, however, as not every credit union submits their return in time for these statistics the number of credit unions for this quarter may be slightly higher than stated. These numbers are generally revised upwards on the next Bank of England release, ABCUL updates it’s data-set with these revisions each quarter.

Comment:

Credit union membership has every year since our records began in 1979. However, when looking at the quarterly data we see periods of no growth and even reductions in membership. The first decrease in membership can be seen in Q3 2015 and decreases also occurred in Q3 2016, Q1 2017 Q3 2017, Q1 2018. The highest decrease in a quarter has been just under 6,000 members whilst the largest gains made in a single quarter was over 35,000 members. Whilst the trend remains positive credit unions will need to work harder than ever in future to continue attracting new members.

Comment:

In a similar vein to membership, the total assets in the sector continue to grow gradually. However, the double-digit growth has been replaced with single-digit growth since 2015 and the accumulation of assets is continuing to slow down each year. Q4 2016 is the only quarter where credit union assets in Great Britain is recorded as falling, this was by around £8 million.

Comment:

Loans paint a more positive picture as the growth has actually picked up over the last couple of years and has bucked the trends of falling behind assets in terms of percentage gains. For example, in last quarter loans grew by 4.7% whilst assets only grew by 0.5%.

Comment:

As a result of the strong growth over the last quarter, the loan to asset ratio has hit it’s highest in 5 years at 59.6%.

Comment:

Capital has seen strong growth and credit unions have put on twice the amount of capital compared to assets over the last three quarters. It is likely that credit unions have actively sought to increase capital whilst controlling the income of shares as some approach the higher 8%+2% capital threshold (previously 8%) introduced on 30 September 2018.

Comment:

Looking at capital from another angle is the ratio of credit unions’ capital to their assets. Over the whole sector credit unions has an average of 12.1% capital to assets in Q4 2018 which is the highest level seen since 2012.

Comment:

Returning to the issue of loans, arrears have also been increasing. Whilst not apparent from this graph, the growth in arrears were 11% compared to 5% loan growth in Q4 2018. This can bee seen more clearly in the next graph.

Comment:

Credit unions have seen the percentage of their loans in arrears increase significantly over the last few years and is now above the World Council of Credit Unions (WOCCU) target of 5%.

Comment:

Income and expenditure are roughly tracking the movement of each other. Profitability remains the ‘spikiest’ data sequence in this series, and with all the ups and downs over the last 5+ years, credit union profitability is roughly the same as it was in 2013.

Conclusion

As we can see from the final combined chart, credit unions are generally growing in size on all metrics despite their declining number. Whilst assets and members have slowed in recent years, the uplift in the value of the sector’s lending is encouraging.