Non-Consolidated Annual Report 2016

BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED NON-CONSOLIDATED ANNUAL REPORT 2016 10 mostly to concentration and credit quality. However, we reduced our delinquency ratio to 6.3 percent, down by 0.4 percent from previous year. This was achieved by prudent and continuous management of our loan portfolio. We continued to offer payment solutions to our members through various debt management and consolidation strategies to improve their financial and economic well-being. Non-performing loans during the year ending March 31, 2016 increased by $1.8 million or 3.5 percent. However, the delinquency rate decreased from 6.7 percent at March 31, 2015 to 6.3 percent at March 31, 2016. We will continue to work with our membership to offer solutions geared at returning their accounts to a state of normalcy. Deposit interest rates in the market continued to trend downward and reached an average of 0.5 percent at March 31, 2016. However, we at the Credit Union are proud to maintain some of the most competitive rates on deposits. This resulted in deposit growth for the year of $87.8 million. REVIEW OF FINANCIAL PERFORMANCE TOTAL INCOME AND NET INCOME With asset taxes of $1.9 million incurred during the year, net income was reported at $13.5 million compared to $9.6 million in the prior year, an increase of $3.9 million or 41 percent. Total revenue grew by $8.2 million or 11.4 percent, moving from $71.7 million in 2015 to $79.9 million during the 2016 financial year. The Credit Union achieved significant net loan growth when compared to prior years, as net loans grew by $71.3 million or 9.6 percent when compared to $62.2 million for the year ended March 31, 2015. NET INTEREST INCOME Net interest income grew by $6 million or 13.5 percent in 2016. Total interest income grew by $7.2 million or 10.4 percent, while total interest expense increased by $1.2 million or 4.9 percent. Interest income increased by $7.4 million or 11.3 MANAGEMENT DISCUSSION AND ANALYSIS This section of the Annual Report provides a discussion and analysis of the financial condition and performance of the Barbados Public Workers’ Co-operative Credit Union Limited (BPWCCUL) for the financial year ended March 31, 2016 as compared to the prior financial year ended March 31, 2015. ECONOMIC REVIEW At the end of 2015, the Barbadian economy was estimated to grow by 0.5 percent, mainly due to the stellar performance of the tourism industry. The financial system in Barbados has demonstrated its resilience and maintained excess liquidity in 2015 despite the challenging local and international economic environment. It is forecasted that in the 2016/2017 financial year, the economy is expected to grow by 1.6 percent. Despite the economic climate as highlighted in the Financial Stability Report from the Central Bank of Barbados, total assets of the Credit Union Sector were reported at $1.9 billion dollars in 2015, representing a 7.0 percent increase over 2014. The largest contributor to growth was the aggregate loan portfolio, increasing by 7.0 percent, followed by an increase in investments of 6.0 percent. From January to September 2015, total new loans of $208.0 million were concentrated mostly in consumer loans ($106 million), real estate ($62 million) and transport ($36 million). Average liquidity in the Credit Union Sector remained stable. Non-performing loans relative to the total loan portfolio fell from 9.1 percent to 8.9 percent at September 2015. However, the quality of the loan portfolio was relatively skewed where smaller credit unions were recorded to have had substantially higher non-performing loan ratios than that of the larger ones. According to the most recent report published by the CUNA Mutual Group on Credit Unions in the USA, during February 2016, Credit Unions picked-up 820.0 thousand in new membership, loan and savings balances grew at 11.0 percent and 8.1 percent seasonally-adjusted annualized pace, respectively. Additionally it was reported that total Credit Union assets rose by 1.6 percent in February, below the 1.9 percent gain reported in February of 2015. Assets rose 6.1 percent during the past year due to a 5.7 percent increase in deposits, a 12.4 percent increase in borrowings and a 7.6 percent increase in capital. OVERVIEW During the year under review, the Credit Union continued to grow in key aspects of its operations. Membership averaged 447 per month and recorded net growth of 5,363. Deposits grew by $87.8 million or 11.3 percent, while assets grew by $90.0 million or 9.7 percent. The key area of risk faced by the Credit Union sector relates