Consolidated Annual Report 2015

BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED CONSOLIDATED ANNUAL REPORT 2015 14 The Credit Union led the growth in the mortgage loan portfolio which accounted for approximately $18.3 million in mortgages. Consumer loans were the major instrument of loan growth at the Credit Union accounting for $44.3 million of the portfolio increase. This increase resulted from a more targeted marketing approach, innovative loan promotions and from continuous streamlining of the loan approval and disbursement processes. These initiatives enabled the sustainment of the increasing loan trend realized across the Group. The Group remained highly liquid with total cash resources totaling $108.8 million. Financial investments increased by $5.3 million or 20.6 percent due largely to additional purchases of government securities during the financial year. Asset Quality The delinquency ratio increased slightly from 6.7 percent in 2014 to 6.8 percent at March 31, 2015. This is commendable given the current environment and is attributable to close monitoring of delinquent accounts, creating payment solutions for members who are experiencing challenges and strict adherence to credit control and underwriting requirements. The Group also maintained a consistent approach to the provisioning process based on thorough reviews of individual credits and analyses of collective portfolio risk characteristics. A key focus of management in recent months has involved working proactively with members and customers to offer financial counseling and provide alternatives to current loan arrangements with the aim of maintaining sound credit ratings and risk profiles. Liabilities The Group’s strong liquidity position continued to be driven by the growth in deposit liabilities. At the financial year end, the Group’s deposits totaled $915.3 million, an increase of $76.3 million or 9.1 percent higher than at the previous year-end. Deposits at the Credit Union grew by $53.3 million or 7.4 percent, while Capita continued to reflect a steady increase in customer deposits which increased by $23.1 million or 16.9 percent. 0 200000 400000 600000 800000 1000000 2011 2012 2013 2014 2015 712,623 749,729 774,615 825,149 906,060 In BD$'000 Loans and advances 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 During the year under review the Credit Union repaid two high interest rate loan facilities so as to reduce its debt service costs and improve the overall net interest margin yield. The Credit Union’s total loan repayment amounted to $10.2 million and was largely responsible for the reduction in loans payable from $64.0 million at March 31, 2014 to $52.0 million at March 31, 2015. Equity As at March 31, 2015, the Group’s total equity was $105.4 million, an increase of $8.8 million or 9.2 percent over the previous year. The increase was primarily due to increased profits of $10.3 million and growth in Credit Union share capital of $0.5 million, net of dividend distributions of $2.0 million, paid to Credit Union members during the year. The Group’s capital adequacy ratios are above minimum capital requirements. These are continuously monitored when assessing capital needs and evaluating changes in strategic focus, risk tolerance levels, business plans and the operating environment that might materially affect capital adequacy. OUTLOOK – 2015 and Beyond In the financial market, innovation is no longer incremental but more exponential. The most remarkable advances have been in the way in which products and services are delivered and utilised. These innovations are not driven by the financial industry, but by technology pioneers such as Apple and Google. Thus as mobile devices advance, so too do the applications for nearly every industry, including finance. In the past few months, we have seen major innovations in mobile biometric security protocols and wearable devices, uses which are already making their way into the banking sphere. The key to our success is to position the Group to capitalize on such innovations. MANAGEMENT DISCUSSION AND ANALYSIS