Non-Consolidated Annual Report 2020

BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED | NON-CONSOLIDATED ANNUAL REPORT 2020 12 driven mainly by increases in cash and cash equivalents of $61.3 million or 26.2 percent, loans of $48.5 million or 4.9 percent and due from related parties of $9.3 million or 48.8 percent. At March 31, 2020, net loans and advances to members were $1.0 billion, inclusive of an expected credit loss allowance of $23.8 million, compared to $997.5 million inclusive of an allowance of $24.7 million at the end of the 2019 financial year. The main drivers of this growth were mortgage and vehicle loans. ASSET QUALITY The Credit Union’s delinquency ratio moved from 8.6 percent at March 31, 2019 to 9.9 percent at March 31, 2020. Non-performing loans increased by $16.9 million compared to $15.9 million in 2019. This equated to a 19.2 percent increase for the period ending March 31, 2020 compared to a 22.1 percent increase in the prior year. LIABILITIES A falling interest rate environment presents challenges to credit unions given the potential to negatively impact deposit growth. Despite the challenges we were able to quickly adapt to multiple downward interest rate changes while still maintaining our reputation of offering attractive returns across all deposit products. The organization continues to pay higher than market deposit rates to ensure that our members benefit from a premium on deposit for their continued patronage. This benefit to members was delivered while remaining competitive and without impacting the financial strength and stability we have become known for. The Credit Union’s operations continued to be funded solely by membership deposits. Deposits at March 2020 totaled approximately $1.3 billion which was $104.5 million or 8.9 percent higher than the previous yearend. The weighted average deposit cost moved from 2.4 percent in 2019 to 1.9 percent in 2020. MANAGEMENT DISCUSSION AND ANALYSIS (Continued) Other liabilities fell by $2.6 million or 24.4 percent over that of the prior year. However, the adoption of the new accounting standard, IFRS 16 relating to the treatment of leases resulted in additional $2.7 million in other liabilities, bringing the total positive variance to $133.4 thousand or 1.2 percent. EQUITY Total equitywhich comprisesmembership’s share capital, retained earnings, statutory and other reserves provides for safety of financial stability and allows for future growth and development. As at March 31, 2020, members’ equity totaled $169 million, up from $154.2 million as at March 2019. The increase of $14.8 million was predominantly attributed to the positive impact of net income for the year of $17.1 million and the growth in share capital of $607.8 thousand and distribution to members of approximately $3.6 million. THE WAY FORWARD The Credit Union continues to be focused on innovation and improving service delivery channels to enhance the member experience. The effective leveraging of technology blended with personalized high quality service delivery from employees will be a key element in ensuring we meet and exceed the needs of all of our multi-generational members. To enhance member convenience, we will soon be providing access to members to apply for loans online, minimizing the need to come into the branch to initiate the process. This service will be as secure and convenient through robust data and cyber-security protocols. Our International Debit Card product, the replacement for our existing card, is expected to be in the hands of members during the early part of 2021. This new international debit card will provide members with the security of chip and pin, the convenience and ease of use of contactless technology, the value-added functionality of being able to use it online while still maintaining current access to merchants, Point of Sale machines and ATMs around the island. As we look out into the coming year, we acknowledge the uncertainty of the current macro-economic environment and the challenges it presents. We anticipate continued strong growth in membership base, but the persistent low interest rate environment will continue to suppress net interest margin. While these environmental factors will no doubt place pressure on our financial performance, our definition of success goes above and beyond a financial return. We believe in the cooperative system and the important role the credit union plays in helping members when they need it most. We are assured that our strong, diversified and member/customer-focused business model will continue to serve us well, and will allow us to continue to help our members and the communities we serve through these tough and trying times. People helping people…we are in this together. 0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 2016 2017 2018 2019 2020 817,839 900,440 958,067 997,535 1,046,080 In BD$'000 Loans and advances 0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 2016 2017 2018 2019 2020 862,900 956,135 1,055,847 1,175,004 1,279,598 In BD$'000 Deposits 0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 2016 2017 2018 2019 2020 817,839 900,440 958,067 997,535 1,046,080 In BD$'000 Loans a d advances 0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 2016 2017 2018 2019 2020 862,900 956,135 1,055,847 1,175,004 1,279,598 In BD$'000 Deposits