Separate Annual Report 2021

12 BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED | SEPARATE FINANCIAL STATEMENTS 2021 During the financial year ended March 31, 2021, the Barbados Public Workers’ Co-operative Credit Union Limited continued to record growth in key areas despite the challenges posed by the COVID-19 pandemic. Net membership grew by 2,905 to reach 102,975 at March 31, 2021, an increase that positively impacted growth in loans by $9.6 million as well as deposits from first time members which grew by $5.1 million. The Credit Union continues to mitigate its principal risk - credit risk, through a robust credit risk management environment that ensures a sound credit-underwriting process, effective and appropriate credit administration and robust measurement and monitoring. The onset of the COVID-19 pandemic and its economic impact increased borrowers’ inability to service their current loan facilities. Consequently, our best efforts notwithstanding, non- performing loans during the year ended March 31, 2021 increased by $42.5 million or 40.6 percent to end at an overall delinquency ratio of 13.6 percent. It is during such challenging times that the proven ethos of the credit union movement, “people helping people”, takes on an even greater meaning. In keeping with that, our focus will continue to remain on assisting our members as they work through the financial uncertainties arising out of the pandemic. We have thus far assisted members by offering special payment arrangements such as loan moratoriums and in some cases debt restructuring. With our staff and members’ safety in mind, we continue to emphasize transaction methods that require minimal to no contact including online and mobile banking, self-serve kiosks, ATMs, our Member Service Center and online appointment scheduling. Despite the downward trend of deposit interest rates in the market to all-time lows, the Credit Union intentionally continues to maintain some of the most competitive rates available to members. This commitment to allowing members a reasonable return has resulted in the Credit Union achieving deposit growth of $94.7 million at the end of the financial year 2021, at an average rate of return of 1.7 percent. Consequently, as deposits increased, available cash resources grew from $294.9 million at March 31, 2020 to reach $387.7 million at March 31, 2021. Review of Financial Performance Total Income And Net Income Total income, comprised of interest and non-interest income, was reported at $87.3 million for the year ended March 31, 2021 compared to $94.4 million in the prior year. As a result of this decrease, net income for the year was also negatively impacted, ending at $8.02 million, down from $17.1 million in the prior year. Net Interest Income Net interest income is comprised of interest earnings on assets such as loans and securities, less interest expense paid on lease liabilities such as deposits and wholesale funding. Net interest income declined by $5.9 million or 9.0 percent in 2021 as non- interest earning non-accrual loans increased, while deposit costs decreased by $335.8 thousand or 1.4 percent. Interest income from loans and advances together with that from cash resources decreased by $6.4 million or 7.3 percent, and $22.2 thousand or 3.5 percent respectively. In contrast, interest from financial investments increased by $94.0 thousand or 6.9 percent. Other Income Other income declined by $790.5 thousand or 17.5 percent during the financial year. The collection of income from charged off loans declined by $411.9 thousand or 35.1 percent, while fee income and legal income declined by $167.2 thousand and $166.5 thousand or 9.4 and 8.1 percent respectively. Efficiency And Expense Management Staff Costs & Support The safety of our staff remained paramount during the pandemic, and as a caring organization we provided support in the form of enhanced safety protocols and practices. This included supplying masks and hand sanitizer for all staff, adding of protective barriers to our teller line and work stations and the limiting of branch traffic in accordance with health protocols. Compensation and benefits to staff decreased by $1.7 million or 8.2 percent, indicative of a change in our operating model as staff worked from home and regular staff related expenses were reduced. Despite the challenges brought on by the onset of the COVID-19 pandemic, the quality of service provided by the Barbados Public Workers’ Co-operative Credit Union’s team and their dedication to serving our membership has remained consistently high and worthy of acclamation. This is evident by a customer service score of 9.6 out of 10 surpassing an internal target of 9.0. This is demonstrative of the fact that our team remains committed to being your trusted financial partner of choice and supporting you through these difficult times. Management Discussion and Analysis (Continued) Net Interest Income