A cyber attack erased $1.29 million from the surplus that the Barbados Public Workers’ Cooperative Credit Union Limited (BPWCCUL), the country’s largest credit union, would have recorded over the past year.
This and $3.2 million in costs related to BPWCCUL’s organisational redesign meant that the cooperated earned a $5.17 million, rather than $9.67 million it would have recorded under normal circumstances. The prior year’s net surplus was $8.82 million.
The challenges are detailed in the credit union’s annual report for the financial year ended March 31.
In the board of director’s report, president Mark Hope said the last financial year was one “that saw our usual level of surplus materially impacted by several abnormal and one-off matters”.
Those, he mentioned, included $1.29 million in “fraud losses arising out of a sophisticated BIN attack that resulted in the compromise of some of our members’ Mastercard debit card”.
A BIN attack is payment card fraud where cybercriminals try to guess valid credit card details like the Bank Identification Number, expiration date, and card verification value CVV, and if they are successful use the information to carry out fraudulent acts, including purchases.
Other challenges Hope mentioned in the board of directors report were: Increased expenses arising out of corporate redesign staff related costs.
Lower than budgeted interest income from consumer loans.
Loss of interest income driven by write-offs due to the fact that some of our core borrowing members had reduced jobs opportunities making it impossible at times to fulfil their financial obligations to the organisation.
“The period under review was a challenging one for the board and management,” he said.
Hope attributed this to “increased threats that are becoming more routine in the financial services sector such as cybersecurity attacks and incidents, heightened and more aggressive competition from banks and other non-bank lenders, rising regulatory burdens, and the continued and increased need for more expeditious digital transformation and enhanced talent management across the credit union”.
“A review of the financial results of the year under review would show a lower than desired surplus, but normalising the organisation’s performance to account for the abnormal fraud and redesign costs that occurred during the year would show a recorded surplus from normal operations being ten per cent better than prior year,” he added.
BPWCCUL’s management discussion and analysis stated that during the year membership increased by 3 476 (3.1 per cent) to reach 117 257; deposits increased by $40.8 million (2.7 per cent), and net loans fell by $3.8 million (0.3 per cent).
The credit union’s cash resources were $477 million at financial yearend, a $28.5 million increase and total assets reached $1.81 billion, a $50.2 million increase. (SC)
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