Consolidated Annual Report 2018

BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED | CONSOLIDATED ANNUAL REPORT 2018 12 This represented an overall increase of $75.4 million or 6.9 percent growth in loans, exclusive of interest receivable, compared to an increase of $97.8 million or 9.8 percent one year ago. Loan growth was primarily lead by growth in consumer loans of $47.4 million while mortgage and business loans grew by $25.0 million and $3.0 million respectively. This increase resulted from utilizing innovative loan promotions and streamlining the loan approval and disbursement processes. The Group remained highly liquid with cash resources totaling $112.8 million. Financial investments and other term deposits decreased by $7.6 million or 9.0 percent due to reductions in renewal interest rates being offered at maturity. ASSET QUALITY: The delinquency ratio marginally increased to 7.4 percent at the end of March 31, 2018 compared to 6.3 percent at the end of March 31, 2017. While this rate was above prior year, it is commendable given the current economic environment andwas attributable to close monitoring of delinquent accounts, actively creating payment solutions for members and customers who were experiencing financial challenges, strict adherence to credit control and changes to underwriting requirements. The Group continues to maintain a consistent approach to the provisioning process. This was based on thorough reviews of individuals’ and businesses’ credit risk and analysis of the collective portfolio risk characteristics. The key focus of management, as it was in previous years, was to take a proactive approach to working with members and customers to offer them financial counselling, alternative loan facilities and restructuring plans so as to assist them in maintaining a sound credit rating and risk profile. LIABILITIES: The Group’s strong liquidity position continues to be driven by the growth in deposits. At the financial year end, the Group’s deposits totaled approximately $1.3 billion, an increase of $121.4 million or 10.7 percent higher than at the previous year-end. During the year under review, the Credit Union repaid all of its external debt and this reduced the Group’s debt service costs and improved the overall net interest spread. The Credit Union’s total loan repayment amounted to $5.3 million and this was largely responsible for the Group’s reduction in loans payable from $22.3 million at March 31, 2017 to $15.2 million at March 31, 2018. EQUITY: As at March 31, 2018, the Group’s total equity was $147.5 million, an increase of $14.9 million or 11.2 percent over the previous year. The increase was primarily due to profits of $17.4 million and growth in the Credit Union’s share capital of $622.1 thousand. There was a net dividend distribution of $3.2 million paid to the Credit Union members during the year. The Group’s capital adequacy ratio continues to be above minimum capital requirements and this is being monitored on an on-going basis 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 – 2018 AND BEYOND The Group remains optimistic that the economy will see real positive changes in 2018/19 and beyond. Expectations are that these changes will improve the circumstances and well-being of our members. In the foreseeable future it is expected that there will be policy changes at the macro level which will give the economy the necessary impetus for growth, encourage foreign and local investments, reduction in the national debt, creation of jobs, fuel the productive sectors and bring back confidence in the Barbadian economy. At the micro level expectations are that there will be changes that enable our members to see relief on their disposable income. The challenges for the Group include: (1) managing loan quality so as to control delinquency and identifying options to assist our members and customers; (2) diversification of our revenue streams due to excess liquidity and (3) leveraging new technologies to provide our products and services at an improved level of efficiency and effectiveness. The Group will continue to be proactive and exercise prudent management of its operating cost so that our members and clients can continue to enjoy competitive interest rates on their savings and deposits. The Board of Directors and management will continue to monitor the economy closely and will formulate and implement policies and procedures accordingly. Our focus is to provide members and customers with products and services to enable them to realize their dreams and create a brighter future for themselves and their families. MANAGEMENT DISCUSSION AND ANALYSIS (Continued) 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$'000 Deposits 0 200000 400000 600000 800000 1000000 1200000 1400000 1600000 2014 2015 2016 2017 2018 1,017,049 1,090,678 1,216,098 1,315,363 1,445,888 In BD$'000 Total assets 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 2014 2015 2016 2017 2018 11,127 9,642 13,182 15,953 17,367 In BD$'000 Net Income