The number of Irish credit unions with at least €100 million of assets has more than doubled in the past decade amid rapid consolidation in the sector and growth in loans and investments.
There were 71 credit unions with balance sheets above this threshold at the end of September, according to the Central Bank’s latest annual report on the financial health of the sector, published on Wednesday. Back in March 2015, the number was 32, according to a previous report from the regulator.
The number of credit unions in the State fell to 172 from 369 over that period while total assets across the movement have jumped by 55 per cent to €22.5 billion. They increased 5 per cent last year alone, according to the latest report.
Gross loans rose 8 per cent to €7.7 billion last year, while member savings increased by 5 per cent to €18.7 billion. Customer savings have jumped 54 per cent over the decade, underpinning growth in loans and investments.
RM Block
While personal loans continue to make up the majority of credit out to customers, mortgage and business loans have been increasing in recent years. Home loans outstanding rose 23 per cent last year alone to €900 million, while business loans increased 5 per cent to €190 million.
Still, the sector’s loan-to-assets ratio, at 33.9 per cent, remains well below the 50 per cent level that is widely considered the optimum.
Consolidation across the sector over the past decade and a half was initially driven by efforts – encouraged by the Central Bank – to stabilise smaller players as they grappled with a slump in lending and income pressures in the wake of the financial crash.
However, a number of the more recent tie-ups have been aimed at credit unions seeking to best position themselves for growth against the backdrop of regulatory and legislative tweaks in the past five years, aimed at improving the viability of the credit union sector.
The Irish Times reported late last month that TUI Credit Union, Comhar Linn INTO Credit Union and Education Credit Union, which have 48,000 members between them, are in advanced discussions to merge into what would become the seventh-largest credit union in the Republic, with more than €450 million of assets.
Laws introduced in 2023 allow credit unions to refer members to peers for services for the first time. They also enable them to club together to provide loans. And they introduced the concept of a corporate credit union – a credit union for credit unions – to support collaboration and pool certain resources.
Last year, the Central Bank gave the credit union movement additional lending flexibility, which, it estimates, would treble the sector’s capacity for mortgage and business lending to about €9.9 billion.
Effective from last September, credit unions, regardless of size, can lend up to the equivalent of 30 per cent of their total assets by way of home mortgages. Business lending can reach as much as 15 per cent of assets.
A group of 25 credit unions confirmed this week that they have come together to set up a credit union services organisation (Cuso) as a first step towards establishing a single body to manage treasury functions for members, with a view to further boosting mortgage and business lending.
The boards of the 25 credit unions have appointed banking veteran John Webb who has previously worked in senior treasury and risk management roles, as acting chief executive.
