Loans in arrears for credit unions in the Irish League of Credit Unions increased to 14.9 per cent from 9.4 per cent in the year to June, according to figures released today.
The league expects that by the end of September, which is the end of the financial year for member credit unions, the figure will have increased further.
However it said that for 30 per cent of net loan arrears, savings had been pledged against potential bad debts.
During the year to June provisions against bad debts were increased to €512 million from €334 million, and for the end of September that figure is expected to be approximately €570 million.
The league said it has more than adequate provisions and reserves. Not all loans in arrears will turn out to be bad debts.
The bulk of member credit unions have reserves of ten per cent of assets and this figure is growing, though five or six may not make the 8 per cent reserve figure that has been set out by the Financial Regulator, Matthew Elderfield.
The league is calling on its member credit unions to be cautious about paying dividends, even when in a position of surplus, given the difficult current economic circumstances.
The league has 500 member credit unions in the Republic and Northern Ireland, and the member credit unions in turn have a total of 2.9 million members.
A small number of credit unions have in excess of 20 per cent of their loan book in arrears but the league has a savings protection fund of €125 million which it uses to assist member credit unions that are in difficulty.
