Credit Union Quarterly Statistics – Q4 2022

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 fourth quarter of 2022 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.

Please note that this data represents an aggregate of all credit unions that submitted their regulatory returns for the financial quarter, and that there will be significant variation between the financial trends seen by individual credit unions that are not reflected in this data. It should also be noted that the latest quarterly data available is often slightly inaccurate, due to a small number of credit unions submitting their regulatory returns late.

Key Statistics for the British Credit Union Sector for the Fourth Quarter of 2022

Credit unions (returns submitted): 246

Total Members (including juniors): 1.44 million

Total Assets: £2.46 billion

Total Shares: £2.12 billion

Total Capital: £284.40 million

Total Loans: £1.35 billion

Quarterly Income: £48.85 million

Quarterly Expenditure: £45.71 million

Quarterly Profit/Loss: +£3.15 million

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

Number of Credit Unions: 246 credit unions submitted returns to the PRA in the fourth quarter of 2022. This is three less than the previous quarter. This slight reduction is in keeping with the steady decrease in number of credit unions seen in Great Britain.

A decrease in the number of submitted returns can be due to three separate reasons: credit unions merging, credit unions winding down/up, or credit unions submitting their returns late. Due to this, the number of credit unions for this quarter may be higher due to late submissions.

Total Number of Credit Union Members: The total number of credit union members in GB increased by 1.4% between the third and fourth quarters of 2022 which equates to 20,097 new members. A slight decrease in junior members was observed across the quarter, but this was accommodated for by a large increase in adult members.

The fourth quarter of 2022 saw the largest total number of credit union members since records began.

Average Number of Members per Credit Union: The average number of members by credit union has also increased by 2.65% from 5,717 in Q3 2022 to 5,869 in Q4 2022. However, from this data it is not clear what percentage of growth in average credit union membership size is due to merger of credit unions, and how much is due to organic member acquisition.

Total Value of Loans: The total value of credit union loans in GB has increased by 5.8% between Q3 2022 and Q4 2022. This has risen from £1.28 billion in Q3 to £1.35 billion in Q4. This increase is likely due to a broad increase in demand for credit from individuals driven by the cost of living crisis and seasonal demand.

Total Shares: Total credit union shares for GB have seen a slight decrease of -0.1% between Q3 2022 to Q4 2022. This quarter shows the first plateau following the steady increase in shares since 2019. This minor decrease is likely due to individuals having to withdraw savings to cope with the pressures of the cost of living crisis and financial pressures on the lead up to the festive period.

Total Assets: Total credit union assets saw no statistically significant change between Q3 2022 and Q4 2022. The total assets held by GB credit unions is £2.46 billion.

Loans to Assets Ratio: The total loans to assets ratio for GB credit unions has increased to 55.1% in Q4 2022 from 52.1% in Q3 2022. This likely reflects the increased drive credit unions have made to lend more, however, the increase seen in total value of arrears may be correlated to the increase in total loans to assets.

Total Income, Expenditure and Profit:

British credit unions’ total surplus in the fourth quarter of 2022 was £3.15m.

The following changes were seen across the sector in the fourth quarter of 2022 compared to the previous quarter:

Change in Total Income: 8.7%

Change in Total Expenditure: 9.5%

Change in Total Profit: -1%

Total Value of Arrears: The total value of net liabilities in arrears from the returns submitted in the fourth quarter of 2022 has increased by 10.47% since the previous quarter. The total value of arrears has risen from £91.7m in Q3 2022 to £101.3m in Q4 2022.

This increase is likely due to the higher demand for credit from the cost of living crisis and increasing difficulty when assessing the affordability of members. Furthermore, quarter four includes the months of October, November, and December (2022) where the cold weather and enormous cost of heating a home likely forced some to access credit they struggled to repay.

Arrears to Loans Ratio: The arrears to loans ratio (the percentage of the total loans value in arrears) across the sector has increased slightly across the last quarter to 7.48% from 7.16%. Although the ratio has decreased since the spike seen during COVID, there is still an upwards trend across the last few years.

Total Capital: The total value of capital held across the sector increased only slightly by 0.5% between the third and fourth quarters of 2022. This brings the total to £284.4m and is in keeping with the overall increase in capital across the last five years.

Capital to Assets Ratio: A slight increase in the capital to assets ratio was seen between the third and fourth quarters of 2022, going from 11.5% to 11.6%. The growth in capital compared to assets in recent quarters is a promising indicator for the financial wellbeing of the credit union sector, and indicates recovery in the financial resilience of credit unions following the difficult economic circumstances faced during the Covid-19 pandemic.

Liquidity: The percentage of total credit union assets that were liquid for the British sector was 25% in the fourth quarter of 2022, a small decrease from 27.0% in the third quarter of 2022. This may indicate a slight increase in credit union investments, but this small change is difficult to know why entirely.

Summary

The fourth quarter of 2022 has shown mixed trends as the cost of living crisis continues to impact households. There has been an increase in the total value of loans, and decrease in the total shares, suggesting that the cost of living crisis is leading to greater demand for credit or access to savings. This quarter has also shown an increase in the total number of credit union members, the highest recorded figure since the Bank of England started publishing the statistics previously published by the Financial Services Authority in 2013.

However, there has been a significant increase this quarter in the total value of arrears and a slight increase in the arrears to loans ratio.

The impact of the cost of living crisis on the credit union sector is starting to emerge in the quarterly statistics and will become more apparent in future publications. We anticipate the total value of both loans and arrears to be on an upward trend, due to the growing demand for credit to cover increasing living costs, and the broad decline of households’ financial wellbeing.