Credit Unions report loan arrears of €725m for 12 months to September

The Irish League of Credit Unions has reported loan arrears of €725 million among members for the 12 months to September, as borrowers continue to feel the impact of unemployment and austerity measures.

New figures from the league, which represents 380 credit unions in the Republic of Ireland, show that some 18.5 per cent of outstanding loans are now in arrears. However, this is a fall of €122 million year on year, and a decline of €49 million quarter on quarter.

The value of loans being written off has also decreased year on year, from €135 million in 2012, to €125 million this year. Credit unions in the Republic advanced €1.6 billion in loans to their members in the full year to September, according to the figures. The league said the loan book is down 10.5 per cent year on year due a lack of demand and continued restrictions on lending.

Membership up
Credit union membership on the other hand has increased by 20,000 for the full year to September.

Irish League of Credit Unions chief executive Kieron Brennan said the figures were reflective of the ongoing economic challenges faced by the State and the league's 3.1 million members.

He said the number of credit unions in deficit had been reduced but that loan arrears remain a concern for the movement.

“Credit unions continue to operate responsibly and have increased provisions against bad and doubtful debts. We continue to prioritise provisioning over payment of dividends but we do believe that this is the right decision given the current climate.”

While the implementation of the new personal insolvency regime will have some impact on all lenders, and the effects have yet to be felt to date, Mr Brennan said he expects the impact on credit unions to be minimal.

He said credit unions were “well capitalised” in general, with total capital of €1.91 billion in credit unions in the Republic, and more than €660 million in surplus capital above the required levels.

Savings at credit unions increased 1.1 per cent to €10.5 billion for the year to September, which the league said was a “remarkable statistic given the lower dividends paid by credit unions in recent years”.