Mortgage lending at credit unions increased by 10% to €518 million in the three months to the end of June.
That’s according to the latest quarterly results from the Irish League of Credit Unions.
Mortgages now make up nearly 10% of the total credit union loan book.
The ILCU puts this growth down to demand, driven by competitive rates and a personalised service with quick turnaround times.
ILCU CEO David Malone said credit unions are providing much needed competition and customer choice in the hyper concentrated mortgage market.
However, he said, credit unions are restricted by what he called “arbitrary crisis era regulations”, that limit the amount they can lend in respect of mortgages.
“These limits are actively prohibiting competition and are not in the best interests of financial stability or enhanced consumer protection. It is imperative that targeted proportionate changes are made to the existing regulatory limits by the Central Bank,” he said.
“Given the clear demand for mortgages and credit union services overall, changing the lending limits will offer an immediate and tangible benefit to aspiring homeowners across Ireland. As such, it is our understanding that the Central Bank of Ireland will issue a report on the review of the lending framework by the end of the year, which we very much welcome.”
The ILCU represents 90% of the total active credit unions in the Republic of Ireland. Today’s results for April to June reflect the 13th straight quarter of sustained lending growth with a cumulative increase of 12.8% for the last 12 months.
Overall, credit unions’ market leading share of the unsecured personal lending market has increased to 53%. The increased lending is against a backdrop of all time low arrears of 2.5%.
The assets of ILCU affiliated credit unions stood at €18.3 billion at the end of June 2024 while savings in ILCU affiliated credit unions have increased to €15.3 billion.
In total, there were over 110,000 new loans issued in the quarter, this is up 21% on the previous quarter, and equates to over 1,200 loans issued every day.
With annual loan growth of 12.8%, the loan book now totals €5.74 billion which is the highest level in over 15 years. In addition, the average loan is now for the first time over €10,000.
The Q3 results demonstrate a well-rounded performance, with both traditional and digital channels contributing to the credit union’s success.
With regard to current accounts, credit unions processed in excess of 8 million electronic payments, of which 58% were card based and 42% SEPA transfers – an overall increase of almost 16% when compared to the same quarter in 2022/23.
Of the card-based transactions, 95% were point of sale or online with 5% ATM withdrawals.
In terms of point-of-sale transactions, contactless was by far the preferred method, with 60% of all point-of-sale transactions paid using contactless payment.
In terms of current account growth, 1 in 10 of current accounts opened in the last quarter was with a credit union, showing continued growth in the number of people choosing to bank with their local credit union.
The recent growth in credit union members using digital services is quite significant. Over the past 12 months, there have been 14.1 million digital transactions conducted by credit union members, with a total value of €2.3 billion. This marks a notable 30% increase in digital transactions compared to the previous year. It represents a fourfold increase in digital transaction volume over the last five years.
Mr Malone said credit unions are not just in 400 locations around the country, “we are also in your pocket or handbag too”.
“These results highlight an increasing shift of members accessing everyday banking services digitally through their credit unions. Credit unions are digital when you want it but also here in person when you need it, as described by the launch of our new national advertising campaign that showcases our heritage, offering, reach and future growth.
“This holistic approach is what sets us apart from other financial institutions and drives our evolution,” Mr Malone said.
Article Source – Mortgages make up 10% of credit union loan book – ILCU – RTE
