2020 Statistics: Impact of Covid

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The PRA have released the statistics for Credit Unions based on the 30 September 2020 quarterly returns. As expected the results show the sector has been badly hit by the pandemic.

In terms of the Balance Sheets the pandemic has led to a decrease in lending and an increase in savings demonstrated by:

  • 3% drop in lending over the year
  •  12% increase in shares over the year
  • These factors have contributed to a 25% increase in liquid assets at a time when interest rates are extremely low.
As expected surpluses have also dropped with the increase in arrears and decrease in lending caused by Covid-19:
  • 25% drop in UK surpluses compared to the previous period. It should be remembered that many Credit Unions took advantage of the provisioning waiver otherwise the results would have been worse.
  • 37% increase in UK net liabilities in arrears (15.5% increase in number of cases)
The 37% rise in net liabilities in arrears is a major concern with the full impact not fully showing yet in the Revenue Account as many of these arrears will be less than 12 months in arrears. 2021 unfortunately will be a tough year with the further impact of the pandemic.

The capital ratio of the sector as a whole has dropped from 12.6% to 12% with the increase in shares and bad debts. The capital ratio changes last March helped many Credit Unions but there will be many Credit Union’s with capital ratios coming under increasing pressure as the pandemic continues.