Credit unions could expand loan books by more than 50% – survey

‘Green’ loans should be targeted, respondents say

Credit unions had €13.2 billion on deposit at the end of March,  and many have imposed savings caps. Photograph: Collins

Credit unions had €13.2 billion on deposit at the end of March, and many have imposed savings caps. Photograph: Collins

 

Credit unions have the capacity to expand their loan books by an average of more than 50 per cent but there is not enough demand for loans among their members, according to new research.

The Association of Certified Chartered Accounts (ACCA) conducted a survey of 100 credit unions at a recent joint conference with the Credit Union Managers Association.

All but one of the credit unions said they had additional, unused lending capacity. Many of those surveyed said the sector should look to develop “green” loan products targeted at consumers who wish to instal renewable energy solutions or for electric cars.

Respondents suggested, however, that Central Bank restrictions on the permitted mix of large long-term loans and smaller loans meant that they were unlikely to deploy much of their excess lending capacity at the home loans market.

Home loans

“Home loans are not seen as a very viable option by most credit unions. The limits currently imposed by the Central Bank on longer term loans restrict the number of loans a credit union might make,” said Grainne Murphy, chairman of the ACCA’s credit union network.

“These limits mean that the set up and monitoring costs can exceed the loan interest that the loans might earn.”

Aidan Clifford, ACCA Ireland’s technical director, suggested that credit unions could target lending to boost small and medium businesses.

There is currently a glut of cash on deposit at credit unions – €13.2 billion at the end of March – and many have imposed savings caps to combat charges imposed by pillar banks on corporate depositors such as credit unions.