Gross lending across Irish credit unions jumped 12 per cent to €7.1 billion in recent years, helped by mortgages, according to the Central Bank, as the sector continues to benefit from easing regulatory and legislative restrictions.
The latest annual report from the regulator on the financial conditions of credit unions shows the sector had €32.90 out on loan for every €100 of assets at the end of last September.
While it remains well short of the 50 per cent loan-to-assets ratio that is seen as optimal for the sector, it marked an improvement from 30.6 per cent in 2023 and 27 per cent two years earlier.
Personal loans continue to make up the majority of credit union loans, totalling €6.13 billion, or 86.8 per cent of total loans outstanding, according to the report.
At the same time, credit unions have continued to diversify their loan portfolios, in particular increasing their property lending. House loans accounted for 10 per cent of loans outstanding as of September, with a total value of €733 million.
“The latest financial conditions report confirms what many in the sector already know, that credit unions continue to strengthen their financial position and play an increasingly important role in the Irish financial landscape,” said Helen Carbery, chief executive of the Credit Union Development Association (Cuda).
“We particularly welcome the increase in house lending, which rose 47 per cent year-on-year, underlining the growing role credit unions are playing in the Irish home loan market.”
The increase in lending has occurred against the backdrop of regulatory and legislative tweaks in the past four years, aimed at improving the viability of the credit union sector.
The Central Bank eased previously highly restrictive limits on long-term lending in 2020.
Laws introduced in 2023 allow credit unions to refer members to peers for services for the first time. They also enable them to club together to provide loans. And they introduced the concept of a corporate credit union – a credit union for credit unions – to support collaboration and pool certain resources.
In December, the Central Bank proposed giving the credit union movement additional lending flexibility, which, it estimates, would treble the sector’s capacity for mortgage and business lending to €8.6 billion.
It would allow credit unions, regardless of size, to lend up to the equivalent of 30 per cent of their total assets by way of home mortgages. It proposes that business lending can equate to as much as 10 per cent of a credit union’s assets.
Robert Troy, Minister of State at the Department of Finance, told an Irish League of Credit Unions (ILCU) conference on Friday that he met the deputy governor of the Central Bank this week to discuss the proposed changes, which are expected to take effect later this year.
“The proposed targeted changes to the lending regulations will result in significant overall capacity for house and business lending. This is welcome news for the credit unions as I know many of you are keen to lend more to members,” he said.
Ongoing consolidation across the movement has resulted in the number of credit unions in the State falling to 183 last September from 192 a year earlier and 428 at the end of 2006.
