Gavan Reilly's Portfolio writings, ramblings, mumblings

‘Onwards and upwards’ as St Canice’s Credit Union survives tough times

ST CANICE’S Credit Union, Kilkenny, reported strong figures at last week’s Annual General Meeting despite the tough economic times, with rising membership numbers and an announcement that it was pumping €2.4m into the local economy as Christmas draws near.

The Credit Union is offering members a 1% dividend on savings this year, and a 5% rebate on interest paid on loans given out over the last 12 months.

Presenting the accounts for the twelve months up to the end of September 2009, St Canice’s treasurer Eamon McArdle said that the local Credit Union had demonstrated great strength and resilience in the last year in the face of immense turmoil. He added that while the dividend is often seen as the sole indicator of the Credit Union’s performance, a sound and stable institution with strong reserves was equally important in ensuring the Union’s future and the safety of its members’ savings.

St Canice’s has extended its provision for bad debts to €1.6m – an increase of €1 million from the same time last year – but McArdle felt this was prudent in light of the economic crisis, and allowed for members who were currently repaying loans on schedule ut who might run into difficulty doing so in the coming year.

The amount lent by St Canice’s in the 12 months has fallen, with €77.8m of loans outstanding to the Union, down from €85.6m in September 2008. This drop-off of nine per cent has been attributed to a falloff in applications from members who doubt their own ability to repay loans, as part of “prudence” on the part of the Credit Union’s loans officers and credit communities.

Speaking to the Kilkenny People, branch manager Claire Lawton said she attributed the strength of St Canice’s to the fact that the union had been “very conservative” in its policies over the years”, explaining that the institution had always sought to concentrate its lending to members seeking smaller loans rather than offering loans to bigger businesses.

Lawton also explained that St Canice’s had historically kept a larger cash reserve than was required by law, and when the Registrar of Credit Unions had instructed branches to raise their reserves earlier this year, St Canice’s had already been meeting the new target of 10 per cent.

The manager was also pleased with the introduction of sort codes and account numbers with members, which allows account holders to use their Credit Union accounts as de facto bank accounts. She explained that that a Credit Union account was slowly becoming a genuine competitor to a traditional current account, saying that “bar a cheque book, you can do pretty much everything in the Credit Union.”

Lawton went on to explain that the introduction of the new account numbers – which enable facilities through the mainstream Electronic Funds Transfer (EFT) mechanism – was introduced to encourage younger members to join St Canice’s.

Elsewhere, Lawton was happy with the growth of St Canice’s second office, which was officially opened in July at MacDonagh Junction. She commented that prior to the opening of the second branch, there would be regular queues for the High Street premises stretching to the Butter Slip and beyond, and acknowledged that the central nature of the High Street branch led to difficulties with parking and accessibility to some customers. “We’re very happy with the facility over there,” Lawton said, adding that “any members who use it tend to stay using it. It’s a lovely office, very much designed around being warm and friendly.”

Looking to the future, Lawton anticipates further challenges as the economy struggles to escape recession. “Onwards and upwards, hopefully… 2010 won’t be without its challenges, but this year a lot of our surplus was used to prop up our provisions. Brian Lenihan said we’d ‘turned a corner'; we don’t believe people have. That’s why we wanted to keep our provision for bad debts as high as we possibly can – just in case.”