The Twelfth Annual Analysis of Canada’s Largest Credit Unions based on 2014 Audited Financial Statements provides extensive financial comparisons between credit unions, chartered banks and financial institutions includes asset growth and profitability, deposit and loan portfolio, operating results, capital ratios. The Analysis provides an overview of the Credit Unions’ participation in the mutual fund and on-line brokerage industries.
- The 2014 report includes 134 credit unions compared to 131 credit unions last year. The 134 credit unions represent 93.0% of the total movement’s assets compared to 91.8% in the previous year.
- The credit union system membership (not including the Caisses Populaires) has decreased slightly by 6,259 to 5,304,452 in 2014.
- The continued consolidation of the movement* has resulted in the 10 largest credit unions accumulating assets of 82.3 billion representing 48.4% of total assets of the movement compared to $77.8 billion or 48.7% of the movement in the previous year.
- The 10 largest credit unions grew at 5.7% which was slower than the largest credit union’s growth of 7.5% and slower than the total movement’s growth of 6.2%.
- The asset growth of the 134 largest credit unions in 2014 was 7.5% compared to 6.3% in the previous year. The growth of the movement’s assets was 6.2% in 2014 compared to 5.7% in the previous year.
- The number of credit unions in the system declined by 13 credit unions primarily due to mergers and amalgamations from 319 in 2013 to 306 in 2014. While, the number of branches decreased from 1,733 in 2013 to 1,731 in 2014. This is fifth year in row that the number of branches has declined, albeit slightly.
- The movement’s loans increased from $135.9 billion in 2013 to $144.7 billion in 2014, an increase of 6.5% compared to 7.9% in the previous year
- The largest credit union’s insured mortgage loan portfolio (only 39 credit unions reported these figures), stood at $7.7 billion representing 28.2% of the residential mortgage portfolio compared to 45.4% for the large Canadian domestic banks.
- While, movement’s deposits increased by 5.6% from $141.4 billion in 2013 to $149.3 billion in 2014, compared to an increase of 5.9% in the previous year
- The credit quality of the movement’s loan portfolio (as represented by the largest credit unions) remains very favourable and improving. The allowance as a percentage of gross loans for the 134 largest credit unions decreased from 0.31% in 2013 to 0.27% in 2014. The gross impaired loans as a percentage of total loans for the largest credit unions decreased to 0.43% compared to 0.50% in the previous year.
- Despite near historical low interest rates and increasing operating costs, the largest credit unions experienced a lower level of profitability in 2014. The return on assets (ROA) decreased to 0.51% in 2014 compared to 0.64% in 2013. This is lowest level of profitability in the last 9 years.
- Net interest margin decreased slightly from 2.28% in 2013 to 2.23% in 2014 and operating expenses as a % of average assets decreased from 2.27% in 2013 to 2.23% in 2014. The productivity expense ratio (operating expenses as a % of total operating revenue) increased to 76.8% in 2014 compared to 74.1% in 2013.
- Credit unions rely on profitability to grow their capital. The majority of the movement’s total capital is in retained earnings. Capital ratios are affected by balance sheet growth, risk-weighting of growth, and profitability. The movement retains a portion of its annual income to satisfy its capital plans. The remainder of the net earnings are allocated to its members through the movement’s patronage program.
- The movement returned $177.6 million to its members by way of patronage payments, which represented 26.1% of its net income in 2014 compared to 21.3% in the previous year. [Schedule 24]. Total capital stood at $10.8 billion, which represented 6.88% of its assets compared to 6.91% in 2013.
- The movement total BIS risk adjusted ratio increased slightly to 12.83% compared to 12.59% in the previous year. [Schedule 33]
*Definition: “movement*” or” system*” in this report does not include the financial results of caisses populaires system in Quebec, Ontario, Manitoba and New Brunswick.