BARBADOS’ credit union movement is seeing a slight increase in delinquencies, more debt consolidation and a fall-off in the growth of deposits but continued overall expansion in financial health despite tough economic times.
That assessment has come from three leaders of the movement.
When a negligible impact of the recent budget and the depressed national and global economic conditions are added to the equation, what emerges is a relatively stable picture of the performance of Barbados’ credit union movement and the Barbados Public Workers’ Cooperative Credit Union Limited (BPWCCUL), the nation’s largest indigenous financial services corporation.
Those elements were outlined to the Barbados Business Authority by Terrol Inniss, president of the board of directors of the Public Workers’ Cooperative Credit Union’s board of directors; Clorinda Alleyne, its chief executive officer; and Paul Maxwell, CEO of Capita Financial, a subsidiary of BPWCCUL.
All three said that in this troubled economic era in Barbados, the Caribbean and the rest of the world, their financial services institution was on course to register nine to ten per cent growth this year.
“We are seeing a slight rise in delinquencies, but we are also seeing a higher level of consolidation and a reduction in deposit growth because at this time there is less disposable income,” said Alleyne.
“Notwithstanding all of these factors, the credit union has continued to do well and maintains its growth level. The current economic situation is in no way threatening the overall strength of the credit union, not at all. In fact, I think credit unions do better in the type of economic environment we are in right now.”
As for the impact of the recent budget on the BPWCCUL, the CEO said so far it did not have a direct impact “specific to us”.
The November 2010 budget, with its removal of tax allowances, did leave the credit union’s members with less disposal income, “but we are not in a position yet to see the full effect of this [recent] budget”, Alleyne said, adding: “I wouldn’t say the recent budget has affected us specifically.”
Maxwell put the delinquency rate at less than one per cent.
During an interview session in Charleston, South Carolina, Inniss said he would not be surprised if the movement experienced some contraction in the number of credit unions through mergers, a step that would bring about economies of scale.
“In terms of the movement, the growth in the credit union movement in Barbados, not that it is stagnant, but we are at the point where the number wouldn’t greatly increase,” he said.
“There might be a strengthening of the movement by credit unions probably merging so as to keep themselves relevant and be able to withstand the pressures of financial regulation.
“What we may be facing is a situation in which what two credit unions can get together and do for their membership would be more advantageous, instead of remaining on their own. In terms of the Public Workers, we have always strived for a minimum growth level of about ten per cent.
“We were able to achieve that even during the tough financial times and we would be looking for that growth, in spite of the economic conditions,” the board president added.
“We are striving as much as possible to reach that target” of ten per cent this year.
But if it did not reach the target, it would settle for eight to nine per cent growth.
“Given the current situation, we are on even keel to achieve last year’s growth which stood at about 9.5 per cent,” Inniss explained. “We are looking at other areas in which we can increase it. But we are pretty on stream where we were last year.”
Like Alleyne, Inniss spoke about the move towards financial consolidation of BPWCCUL members aided by the institution.
“We want to be in a position [that] when our
members come to us we are able to pretty much reorganize their financial position so that they are in a better position to weather the financial turbulence,” he said. “We see it as a responsibility that all of our members are in good financial standing.” (TB)
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