Non-Consolidated Annual Report 2018

11 BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED | NON-CONSOLIDATED ANNUAL REPORT 2018 MANAGEMENT DISCUSSION AND ANALYSIS OPERATING LEASES Rental expenses decreased from $961.0 thousand in 2017 to $785.8 thousand in 2018. This decrease was directly attributed to the termination of two lease agreements; the kiosk at the Six Roads location and o ce space located at the Co-operators General Insurance building at Collymore Rock. These lease agreements were terminated and sta were relocated to the Olive Trotman building and the newly renovated Clarence Greenidge building on Belmont Road. STAFF COST During the financial year, the Credit Union expanded from four branches to six branches; our new location in Mile and a Quarter and a Mobile Business Centre was added to better serve our increasing membership base. This branch and Mobile Business Centre were opened during the latter half of the financial year and were welcomed by both our existing members and new members. To support this expansion, the Credit Union increased its sta complement to strengthen its Member Services, Internal Audit and Management Information Systems functions as well as to provide adequate frontline and support personnel. Additionally, union negotiated salary increases contributed to the increased sta costs. As consequences of the above, sta costs increased by $556.5 thousand or 3.5 percent over the prior year. TOTAL OPERATING EXPENSES Total operating expenses for the year amounted to $42.6 million, which represented an increase of $4.1 million or 10.7 percent above the prior year. On average this was in line with last year’s increases in total operating expenses due to the prudent management of operating expenditure. NET OPERATING INCOME Operating income net of loan impairment expenses for 2018 increased by $4.7 million or 8.6 percent to end the year at $59.2 million. Loan impairment expense was $6.5 million, an increase of $1.9 million or 40.7 percent over last year. This was directly correlated to an increase in our unsecured loan portfolio. ASSETS At the end of the 2018 financial year, the Credit Union’s total assets amounted to in excess of $1.2 billion, an increase of $112.1 million or 10.1 percent. Cash resources increased by $41.6 million or 44.3 percent. In addition, financial investments classified as held-to-maturity decreased by $2.5 million or 8.9 percent. Net loans and advances tomembers were $958.1 million, inclusive of an impairment provision of $24.3 million, as compared to $900.4 million and $22.6 million respectively at the end of the 2017 financial year. As it was in prior years, consumer loans were the major engine of loan growth. ASSET QUALITY Amid a climate of economic uncertainty, the Credit Union’s delinquency ratio ended the 2018 year at 7.4 percent. In addition, impaired loans increased by $13.7 million during the 2018 financial year as compared to an increase of $5.4 million in the prior year. The Credit Union will continue to work diligently with defaulters to o er them alternatives and restructuring options to enable them to restore their loans to a state of normalcy. LIABILITIES Deposits at March 2018 totaled $1.1 billion and was $99.7 million or 10.4 percent higher than the previous year-end. At the end of 2017, loans payable was $5.3 million. These loans were repaid in full during the 2018 financial year. This allowed the Credit Union to manage interest cost and allowed us to maintain higher than market deposit rates. Other liabilities increased by $1.7 million or 20.3 percent.