Irish credit unions have seen a significant increase in assets over the past few years, reaching a total of €21.5 billion as of 2023. This growth is largely driven by the increasing number of member-owned lenders, with a total of 183 active credit unions in the Republic of Ireland. The sector has also seen an expansion in its loan portfolio, with gross loans outstanding increasing by 12% to €7.1 billion last year. Personal loans continue to make up the majority of credit union loans, totaling €6.13 billion or 87% of total loans outstanding. Mortgage loans accounted for 10% of loans outstanding, with a total value of €733 million.
Consolidation In The Sector
The number of credit unions in the Republic has fallen by more than a quarter in the last five to six years, largely due to voluntary mergers. The Central Bank of Ireland, the regulator for the sector, has reported that the number of credit unions has fallen by 58 since 2019. This trend towards consolidation is driven by a growing awareness of the advantages of scaling up as a means to access additional resources, address concerns about viability, and take advantage of opportunities to innovate and develop new products and services.
- Increasing assets and lending capacity
- Access to additional resources and expertise
- Improved viability and sustainability
- Opportunities to innovate and develop new products and services
The Pros And Cons Of Consolidation
The trend towards consolidation in the credit union sector has both positive and negative aspects. On the one hand, it can lead to increased efficiency and cost savings through the elimination of redundant branches and staff. On the other hand, it can result in the loss of local service and community focus, as smaller credit unions are absorbed into larger entities.
- Increased efficiency and cost savings
- Reduced redundancy and staff costs
- Improved service and access to resources
- Loss of local service and community focus
Recent Developments In The Sector
Recently, two large credit unions, Progressive Credit Union and Drogheda Credit Union, are in talks to merge and create the largest lender in the sector. The combined entity would have an asset size of €615 million and would be regarded as a “super credit union”. It would have 120,000 members if the merger is approved by the Central Bank.
| Asset Size | Number of Members | Combined Entity |
|---|---|---|
| €615m | 120,000 | Progressive Credit Union and Drogheda Credit Union |
Experts’ Views
The Central Bank Director of Banking and Payments, Domhnall Cullinan, noted that the sector is experiencing positive trends in reported credit union data. He said that the Central Bank’s expectation is that the proposed changes to the lending regulations will enable credit unions to undertake increased house and business lending activity, improve loan to asset ratios, and better deliver for their members.
- Increased house and business lending activity
- Improved loan to asset ratios
- Better delivery for members
- Access to additional resources and expertise
Awards And Recognition
The Irish League of Credit Unions, a representative body, has recently announced that the sector has seen significant growth and development. The Central Bank has also acknowledged the sector’s efforts in terms of expanding its loan portfolios, including mortgage lending, and improving its financial position.
- Significant growth and development
- Expansion of mortgage lending
- Improvement in financial position
- Awards and recognition
State’s Credit Unions Now Have Total Assets Of €21.5 Billion
The State’s credit unions now have total assets of €21.5 billion, up 3% from 2023. Gross loans outstanding increased by 12% to €7.1 billion last year, with personal loans making up the majority of credit union loans, totaling €6.13 billion or 87% of total loans outstanding.
Central Bank Review Of Limits On Lending
The Central Bank recently reviewed limits on the amount of lending credit unions can do, particularly for home buying and to businesses. The Director of Banking and Payments, Domhnall Cullinan, noted that the Central Bank’s expectation is that the proposed changes to the lending regulations will enable credit unions to undertake increased house and business lending activity, improve loan to asset ratios, and better deliver for their members.
Opportunities For Credit Unions
The Central Bank’s review of limits on lending has created new opportunities for credit unions. Experts say that the sector can benefit from increased house and business lending activity, improved loan to asset ratios, and better delivery for members.
Conclusion
The Irish credit union sector is experiencing sustained growth, but faces challenges such as consolidation and increased regulatory burden. The Central Bank’s review of limits on lending has created new opportunities for credit unions, and the sector is expected to continue growing in the future.
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