Credit Union Quarterly Statistics – Q4 2020

The Bank of England collates the data from credit unions’ quarterly returns to produce a set of statistics 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 fourth quarter of 2020 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.

Headline Statistics for the British Credit Union Sector

Credit unions (returns submitted): 269

Total Members (including juniors): 1,434,051

Total Assets: £2.034 billion

Total Shares: £1.739 billion

Total Capital: £228.5 million

Total Loans: £1.032 billion

Quarterly Income: £35.9 million

Quarterly Expenditure: £31.3 million

Quarterly Profit/Loss: +£4.6 million

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

Comment:

The number of credit unions in Great Britain decreased by 1 credit union in the last quarter of 2020. This reduction is a significant improvement on the previous quarter in 2020, in which there was a decrease of 7 credit unions in Great Britain.

It must be noted that a decrease in the number of credit unions in this data can be caused by late submission of quarterly returns, and so the fall in the number of credit unions in Great Britain  can sometimes be exaggerated in the latest quarter. However, once the returns are received the previous quarters are corrected by the Bank of England.

Comment:

Following a dip in credit union membership for the third quarter of 2020, the number of credit union members increased by 1.2% in the last quarter of 2020 to 1,434,051. This increase represents a return to the ongoing trend of growing credit union membership and brought the number of members back up to levels seen earlier in 2020.

Comment:

In the last quarter of 2020, there was an increase of in the total value of loans to members of £36.4m. This increase comes after a trend of decreasing loans to members during 2020, which coincided with the Covid-19 pandemic.

Comment:

Total assets increased by £31.4m in the last quarter of 2020 up to £2034.1m for the sector, in line with ongoing growth of British credit union’s total assets seen in recent years.

Comment:

The loans to assets ratio increased by 1% in the fourth quarter of 2020, after a decrease in the ratio throughout 2020. The increased loans to assets ratio for this quarter has been due to the total loans to members picking up in the last quarter of 2020, and the increase in loans outpacing assets growth for this quarter. However, the loans to assets ratio remains lower than the levels seen in the years prior to 2020.

Comment:

The last quarter of 2020 saw an increase in credit unions profitability of £2.2m compared to the previous quarter, due to a large drop in expenditure outweighing a small reduction in credit union’s income.

The following changes were seen across the sector in the fourth quarter of 2020 compared to the previous quarter.

Change in Total Income: – 0.3%

Change in Total Expenditure: – 8.4%

Change in Total Profit: + 91.7%

Comment:

The percentage of loans in arrears decreased by 0.05% in the fourth quarter of 2020 compared to the previous quarter. Despite the slight decrease in this quarter, the loans to arrears ratio remains at one of the highest levels that ABCUL have seen in the time that we have been collecting this data and is approximately twice the level seen five years ago.

Comment:

The total value of net liabilities in arrears has continued to increase, with an increase of 3.1% from the third quarter to the fourth quarter of 2020, taking the total value to £83.5m. From the trends seen in the two graphs shown subsequently, the increase in the total value of arrears has been driven mainly by an increase in the value of loans that are in arrears, rather than by the number of loans in arrears.

Comment:

The total number of net liabilities in arrears across the sector increased slightly by 0.33% in the fourth quarter of 2020. However, the total number of arrears remained lower than in the first two quarters of 2020.

Comment:

The average loan value in arrears increased by £36.70 to £1373.27 in the fourth quarter of 2020, reaching the highest point since ABCUL have started reporting on this data.

Comment:

Capital continued to increase in the last quarter of 2020, by 0.67% compared to the previous quarter.

Comment:

The capital to assets ratio fell by 0.9% to 11.23% at the end of last year, which is a continuation of a sustained decrease in the ratio throughout all of 2020. This pattern is likely due to increased personal savings during the pandemic, which has driven up the number of shares and subsequently pushed down the capital ratio.

Comment:

Liquidity for the last quarter of 2020 was 29%, a slight decrease from the 30% liquidity seen in the previous quarter.

Summary

The credit union sector made some recovery from the impacts of the Covid-19 pandemic during the last quarter of 2020. In particular, the total value of loans picked up again at the end of 2020, following a decrease in loan value across the sector during the pandemic.

However, some challenges from recent years have continued, particularly in relation to loan arrears. Both the total number of loans in arrears and the average loan value in arrears increased in this quarter, whilst the percentage of loans in arrears remains notably high, at above 8%.