Non-Consolidated Annual Report 2016

BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED NON-CONSOLIDATED ANNUAL REPORT 2016 11 MANAGEMENT DISCUSSION AND ANALYSIS percent with respect to interest from loans, while interest from cash deposits and investments decreased by $165.3 thousand or 4.5 percent during the financial year. OTHER INCOME Other income increased by $982.4 thousand or 38.3 percent during the financial year mainly due to an increase of $639.1 thousand or 161.4 percent in the collection of charged-off loans. EFFICIENCY AND EXPENSE MANAGEMENT The Credit Union’s strategy during the financial year was one which focused heavily on efficiency and expense management, while at the same time adding valued member services. Operating expenses decreased by $327.4 thousand or 1.9 percent compared to prior year. OPERATING LEASES Rent expenses increased from $753.1 thousand in 2015 to $870.7 thousand in 2016. This increase was directly attributed to the expansion of the Credit Union’s branch operations at the Six Roads location, installation of two additional offsite ATMs and rental of office space for staff located at the Co-operators General Insurance’s building at Collymore Rock. STAFF COST During the year, the Credit Union increased its staff complement to strengthen its member services, compliance and risk management functions as well as providing adequate frontline and support personnel. Additionally, completed union negotiated salary increases contributed to the increased staff costs by $2.2 million or 17.5 percent over the prior year. TOTAL OPERATING EXPENSES Total operating expenses for the year amounted to $36.7 million, which represented an increase of $3.0 million or 8.8 percent above the prior year. Asset Tax expense levied by the government on the assets of the Credit Union totaled $1.9 million or 0.2 percent. This Tax is scheduled to end effective March 31, 2016. NET OPERATING INCOME Operating income net of loan impairment expenses increased by $6.9 million or 16.0 percent to end the year at $50.2 million. Loan impairment expense was $3.8 million, a marginal increase of $77.2 thousand or 2.1 percent over last year. ASSETS At the end of the financial year, the Credit Union’s total assets amounted to just over $1.0 billion, an increase of $90.0 million or 9.7 percent. Cash resources increased by $8.4 million or 8.9 percent. In addition, financial investments classified as Held-to-maturity increased by $3.2 million or 12.5 percent. Net loans and advances to members were $817.8 million, inclusive of an impairment provision of $20.5 million, as compared to $746.5 million and $21.9 million respectively at the end of the previous year. ASSET QUALITY Amid a climate of economic uncertainty and high unemployment, the Credit Union recorded a decrease of 0.4 percent in its delinquency ratio which ended the year at 6.3 percent compared to the prior year at 6.7 percent.