Consolidated Annual Report 2015

BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED CONSOLIDATED ANNUAL REPORT 2015 12 5.0 percent to 4.7 percent as various pricing strategies were employed to drive loan and deposit volumes. These results were the product of outstanding and dedicated staff. The Group expects a great deal from all of its employees. They must have deep and broad knowledge of its products, services, and systems. They must be accurate, efficient, and compliant. Above all, they must deliver outstanding service with every single interaction. Outlook Undoubtedly, the Group continues to operate in a challenging economic environment that is already impacting on the sustainability and future growth of key players in the financial services sector especially the smaller Credit Unions. Faced with continuing deterioration in credit quality, there is a constant need to reassess capital levels, identify stress points and manage risk exposures. The Group will continue to respond to the current and future challenges as it seeks to maintain its positive growth trends. The impact of large-scale retrenchment of employees in the public service and the introduction of a 0.2 percent tax on assets of non-bank financial institutions have taken effect during the financial year and will continue to do so in the 2016 financial year. Notwithstanding these circumstances, the Group is well equipped to whether the challenges which lie ahead. Economic Review The local economy continues to struggle as it seeks to recover from extended periods of negative growth, despite some growth globally. According to the most recent economic report, the Barbados economy is estimated to have grown by less than 1 percent in 2014. Foreign exchange reserves at the end of December 2014 represented 14.5 weeks of import of goods and services. Tourism value-added is estimated to have increased by 1 percent thereby reversing a downward trend over the last 3 years. MANAGEMENT DISCUSSION AND ANALYSIS This section of the Group’s Annual Report provides a discussion and analysis of the financial condition and performance of the consolidated operations of the Barbados Public Workers’ Co-operative Credit Union Limited, and its subsidiaries (“the Group”) for the financial year ended March 31, 2015. The Group includes the parent, Barbados Public Worker’s Co- operative Credit Union Limited, its subsidiary BPW Financial Holdings Inc. and its subsidiary Capita Financial Services Inc. (“Capita”). Overview At March 31, 2015 the total consolidated assets of the Group reached $1.1 billion reflecting an average growth of $6.1 million a month during the year ending March 31, 2015. This growth epitomized the confidence, loyalty and support in which members and customers have placed in the respective boards, management and staff of the companies within the Group. Snapshot of CAPITA’s Performance CAPITA has continued to grow from strength to strength since its acquisition in August 2010, recording an average asset growth of $1.8 million per year to reach $200 million at March 31, 2015. Its net income after tax has stabilized to average $1.0 million per year. However, CAPITA continues to expand offering a wide diversity of other income opportunities for the Group. One such opportunity is through the establishment of CAPITA Insurance Brokers (CIB) which provides brokerage services to the Group under the CAPITA brand. Through CIB, the Credit Union’s membership has been provided with one of the best health benefit plans within the market. Group Performance Summary The Group’s consolidated net income for the year under review totalled $9.6 million compared to $11.1 million for the previous year. Total tax levied on the assets of the Group for the year ending March 31, 2015 amounted to $1.6 million. The Group continued to maintain tight control over the rate of non-performing loans. Although there was an increase in non- performing loans by $6.1 million across the Group, the rate of delinquency increased marginally to 6.8 percent. A review of the loan portfolio required that the loan impairment provision be increased by $0.6 million in 2015. However, the ratio of provision to impaired loans moved from 40 percent in 2014 to 37.1 percent in 2015. Overall the Group recorded significant growth in its core businesses. Loan growth moved from 6.5 percent in 2014 to 9.8 percent in 2015. Deposit growth climbed from 8.6 percent in 2014 to 9.1 percent in 2015. Net interest margin declined slightly from 0 200000 400000 600000 2011 2012 2013 2014 2015 In BD$'000 0 200000 400000 600000 800000 1000000 2011 2012 2013 2014 2015 673,773 735,909 772,320 839,052 915,312 In BD$'000 Deposits