Non-Consolidated Annual Report 2020

BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED | NON-CONSOLIDATED ANNUAL REPORT 2020 10 To cushion the impact and the effects of unemployment and reduceddisposable income, lending institutions offered their clients moratoria on existing loans. Technology also kept segments of the economy functioning by facilitating remote working arrangements across the private and public sectors. Private Sector Response –Financial Services The financial sector remained stable, with the banking system still well capitalized during the first half of the fiscal year. Excess Liquidity or the Cash Ratio for banks rose from 18.5 percent to 20.1 percent. There was a reported modest increase in non-performing loans. However, increased provisions were made in the event the credit quality of loans worsens post the moratoria period is which is expected to lapse in September 2020. Macro-economic Outlook Overall, the global outlook remains highly uncertain with the IMF’s forecast for global growth declining to negative 4.9 percent as at June. This, along with the depressed demand for global travel introduces significant downside risks to rapid recovery in our tourism sector, our primary engine of growth. With the reopening of our borders and the restarting of businesses and some private sector investment projects, we remain hopeful that there will be some slowing of the economic decline and a firming up of the foundation for recovery in 2021. This should be bolstered by steady resumption of tourism and other tourism dependent sectors. OVERVIEW 2020 marks the year of our Golden Jubilee as a credit union. This is no small milestone and we feel truly fortunate to have reached this significant milestone even in these difficult times we find ourselves in. There is much to celebrate and as we reflect on the past fifty years, and how we got here, we also look forward to the growth and success that is yet to come, being ever mindful that our history informs our future, and our stability fuels our progress. When members choose the Barbados Public Workers’ Co- operative Credit Union Limited, they choose a cooperative that acknowledges, embraces and seeks to fulfill their needs. Members receive access to world-class technological solutions, personalized and high quality service and a portfolio of products and services to meet their needs throughout their various stages of life. This attention to members needs, has resulted in consistent membership growth, with an average of approximately 5,333over 5 years and a milestone membership base of 100,700 as at March 2020. The increase in membership base has positively impacted growth in the key areas of assets, loans and deposits. MANAGEMENT DISCUSSION AND ANALYSIS This section of the Annual Report provides a discussion and analysis of the financial position and performance of the Barbados Public Workers’ Co-operative Credit Union Limited (BPWCCUL) for the financial year ended March 31, 2020 as compared to the financial year ended March 31, 2019 The MD&A should be read in conjunction with the audited financial statements, which have been prepared in accordance with International Financial Reporting Standards (“IFRS”). ECONOMIC REVIEW Covid-19 Impact The impact of the Covid-19 pandemic on the local economy was materially significant as it disrupted business cycles, resulted in the cessation of activity in the tourism sector, caused business closures across other sectors and ultimately led to a series of national curfews. It was against this backdrop that preliminary data, published for the first six months of 2020 by the Central Bank of Barbados in their “Review of the Barbados’ Economic Performance-January- June 2020” report, revealed economic output had declined by almost 15 percent. Public Sector Response As anticipated, reduced economic activity affected the public finances during the first quarter of the fiscal year 2020/2021. The primary balance which is the difference between Government’s revenue and non-interest expenditure, fell by just over $100 million relative to previous year, however, on the upside, it out- performed the target agreed with the International Monetary Fund (IMF). The Barbados Optional Savings Scheme (BOSS) was established by Government in July 2020 to help generate economic activity by diverting a portion of public workers’ salaries to fund capital works. In July 2020, $4.6 million was issued, of which $1.2 million was taken up by public servants and the remainder of $3.4 million was sold to the secondary market i.e. individuals and institutions. Private Sector Response – Non-Financial Services Unemployment claims between March and June surged to over 33,000 with a dollar value exceeding $70million due to the layoffs in the tourism, restaurants and related industries as well as job losses in other sectors. In an effort to minimize the impact of the reduction of customer spend and cash flows, businesses adopted various practices to reduce operating expenses including reduced working hours and temporary. These cost management strategies were widespread and played a significant role in softening the overall impact on unemployment levels. 0 20 40 60 80 100 120 2016 2017 2018 2019 2020 78.4 84 89 95 101 Members in 000