ILCU Statement in Response to Central Bank Reports

Posted on: 18 Dec 2017

ILCU Statement in Response to Central Bank Reports; Financial Conditions of Credit Unions Issue 2 and Long Term Lending Guidance for Credit Unions
The Irish League of Credit Unions (ILCU) today notes the publication of the Central Bank of Ireland’s reports; Financial Conditions of Credit Unions 2012-2017 Issue 2, and the Long Term Lending Guidance for Credit Unions
Credit unions affiliated to the ILCU are in a positive financial position. Lending has increased for the past two consecutive years. The ILCU also notes the Central Bank’s observation of a “stabilisation’’ in the crucial loan-to-asset ratio across the sector and this stabilisation is to be welcomed. Credit unions have been very proactive in this regard in 2017 and the vast majority are now reporting lending increases. There has also been continued and significant progress on arrears with loan arrears down 73% since 2011.
Growing the loan book continues to be a priority for credit unions and the ILCU is cognisant of the need to further enhance lending growth. To this end the ILCU has been working with credit unions to develop prudent, long-term lending strategies, such as a centralised, residential mortgage solution. There has been significant progress in this area with a soft launch of a centralised mortgage offering targeted for April 2018. This mortgage solution is based on a standardised, consistent and reliable methodology.
In addition, the ILCU has developed a comprehensive proposal outlining how surplus credit union funds could be used for social housing. The ILCU has been lobbying the government consistently for action on this front.The ILCU is also seeking support from the Central Bank to broaden the investment classes credit unions can participate in, as we believe this would help to improve investment returns.
With the average credit union capital ratio at 16.5%, credit unions are well positioned to withstand additional financial stresses. Overall ILCU credit unions hold €963 million in excess capital above the 10% requirement.