20 Credit Union Annual Report 2023Pro昀椀tFinancial & EconomicPerformanceThe 昀椀nancial year 2022/23 re昀氀ected exponential growth, with loandisbursements up 30% for the 昀椀rst half of the year and up 41% forthe second half of the year, resulting in an overall increase of 29%.The demand for loans with long-term stability and signi昀椀cantlylower interest rates and lending fees was primarily due to soaringrate increases in the local market led by the rate increases from theUnited States Federal Reserve. As we approached the second halfof our 昀椀nancial year, we saw signs of potential strain on ourorganisation due to the high demand for appointments formembers who wanted to switch their mortgages from other昀椀nancial institutions to our Credit Union. We began implementingmeasures designed to moderate the pace of lending growth andstrategies to boost our excess liquidity.“Overall, we delivered strong 昀椀nancialresults in 2023, 昀椀nishing ahead of ourtargets for net income and net lendinggrowth.Net income of $16.7M (2022: $12.2M) increased by 36%; this wasmostly driven by 21% increase in loan interest income, 600%increase in 昀椀xed deposits placed with banks, and offset by 39%decrease in non-interest income and a 25% increase in noninterest expenses.The 21% (2022: 9%) increase in interest income was mainly due tothe 17% (2022: 12%) increase in total loans net of provisioning. Thedelinquency rate reached a historical low, below 1%, at 0.51% aswe continue to improve our lending practices and manage creditrisk.The 600% increase in interest earned on bank placements resultedin a return on interest income earned on average bankplacements of 3.2% for the year ended 31 July 2023 (2022: 0.53%),a substantial increase of 504% due to the increase in rates in themarket.The increase in income was offset by a 39% decrease in noninterest income relating to an unrealized loss on fair value equityinvestments of -$697K (2022: gain of $163K), which was due to thesigni昀椀cant reduction in the market value of shares held in localequity investments.The 25% increase in non-interest expenses also had an impact onnet income, mainly due to a 24% increase in personnel expensesand a 26% increase in general and administrative expenses. Theseincreases were mostly due to realigning personnel costs based ona market survey and strengthening our information technologyenvironment.All key ratios were positively impacted by the growth in pro昀椀tability,with returns on assets and equity up 24% and 21%, respectively,and the ef昀椀ciency ratio improving by 7%.Our ef昀椀ciency ratio measures how much we spend on ouroperations to generate a dollar of revenue and is calculated bydividing total operating expenses by our operating income. It’sexpressed as a percentage, and a lower number is better. Thisratio decreased in 2023 by 7%; strong revenue growth andeffective management of our operating expenses helped improveour ef昀椀ciency ratio and returns on assets and equity.As we look ahead to the 昀椀nancial year 2023/24, we expect the highdemand for our loan and competitive deposit products to continue.We have taken action to strengthen our 昀椀nancial position andprotect our assets while ensuring that our Credit Union, “The LittleEngine That Could”, will continue to be successful.
It seems that your browser's pop-up blocker has prevented us from opening a new window/tab. Please click the button below to open the link manually.