Consolidated Annual Report 2018

BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED | CONSOLIDATED ANNUAL REPORT 2018 10 the year of $17.4 million compared to $16.0 million for the year ended March 31, 2017. We continue to offer payment solutions to our members and customers including a recently introduced Interest Relief Amnesty and debt refinancing on various stages of delinquent loans and have realized tremendous success in recoveries whilst improving our members’ and customers’ credit rating and financial well-being. However, due to various challenges experienced by members and customers, there was an increase in non-performing loans by $16.8 million across the Group. The rate of delinquency increased from 6.3 percent at March 31, 2017 to 7.4 percent at the end of March 31, 2018. The Group’s loan impairment provision increased by $2.0 million in 2018. Consequently, the ratio of loan provisioning to non-performing loans moved from 38.7 percent in 2017 to 33.2 percent in 2018. Overall the Group recorded growth year on year in its core businesses. Loan growth in 2018 was $75.3 million or 6.9 percent compared to $97.8 million or 9.8 percent in 2017. Similarly, deposit growth in 2018 was $121.4 million or 10.7 percent as compared to $101.3 million or 9.8 percent in 2017. Throughout the financial year ended March 31, 2018, very low interest rates on savings and deposits prevailed in the market. The interest rate on savings and deposits at some leading financial institutions reached a low of 0.01 percent at March 31, 2018. However, the minimum interest rate on deposits within the Group at March 31, 2018 stood at 1.25 percent. Net interest margin for the year was 5.0 percent as compared to 4.9 percent in 2017. Various pricing strategies were employed to drive loan and deposit volumes. These results are credited to the steadfast performance of a truly outstanding and dedicated staff. The Group expects and promotes this commitment and drive for positive results from all of its employees. The Group is committed to ensuring that our employees continue to receive the requisite training so that they acquire and maintain a deep and broad knowledge of our products, services and systems. They are trained to be professional, accurate, efficient, and compliant. In particular, we aim to foster an environment of outstanding service delivery to our members with every single interaction. MANAGEMENT DISCUSSION AND ANALYSIS This section of the Group’s Annual Report provides a discussion and analysis of the financial position and performance of the consolidated operations of the Barbados Public Workers’ Co- operative Credit Union Limited, its subsidiaries and associated companies for the financial year ended March 31, 2018. The group includes the parent, Barbados Public Workers’ Co- operative Credit Union Limited, its subsidiary BPW Financial Holdings Inc. and its subsidiaries CAPITA Financial Services Inc. (“CAPITA”) and CAPITA Insurance Brokers Limited (“CIB”). OVERVIEW: During the income year 2018, the Group focused on providing products and services to its members and customers at competitive rates. In these difficult economic conditions, the Group experienced mixed results such as the significant growth in deposits however loan growth was below expectation. At March 31, 2018, the total consolidated assets of the Group reached $1.4 billion reflecting growth of 9.9 percent at an average rate of $10.9 million per month. To achieve this level of growth in difficult circumstances is commendable and signals the confidence, loyalty and support which members and customers continue to place in the respective boards, management and staff of the financial institutions within the Group. SNAPSHOT OF CAPITA’S PERFORMANCE CAPITA continues to realize steady growth since its acquisition in August 2010, recording asset growth of $15.9 million or 6.5 percent for the year to reach $261.1 million at March 31, 2018. Its Income before levies and taxation at March 31, 2018 was approximately $1.5 million. The Asset Tax for the year was $752.6 thousand increasing by $24.3 thousand or 3.3 percent over the prior year ended March 31, 2017. CAPITA’s income after levies and before taxation was $730.1 thousand while net income after tax was $551.3 thousand for the year. With the commercial banks offering lower lending rates and companies registered under part III of the Financial Institutions Act merging, CAPITA had to aggressively compete for market share. CAPITA has embarked upon some initiatives to augment its revenue streams by partnering with the Barbados Co- operative and Credit Union League and in the Eastern Caribbean with the Caribbean Confederation of Credit Unions. CAPITA Insurance Brokers (CIB) has commenced meeting the Credit Union’s membership at the branch offices in an effort to increase the enrollment in health plans which is facilitated through a partnership with the Insurance Corporation of Barbados. GROUP PERFORMANCE SUMMARY: The Group’s consolidated net income before levies and taxation for the year under review was $18.3 million compared to $16.8 million for the previous year. It is worthy to note, that the tax levied on the assets of the Group for the year ended March 31, 2018 amounted to $752.6 thousand and corporation tax amounted to $178.8 thousand. This resulted in net income for 0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 2014 2015 2016 2017 2018 825,149 906,060 1,001,430 1,099,233 1,174,576 In BD$'000 Loans and advances 0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 2014 2015 2016 2017 2018 839,052 915,312 1,037,172 1,138,486 1,259,922 In BD$'000 Deposits