CONTENTS Organisational Structure . . . . . . . . . . . . . . . 3 Our Leaders Barbados Public Workers’ Co-operative Credit Union Limited . . . . . . . . . . . . . . . . . . 4 Legacy Foundation . . . . . . . . . . . . . . . . . . . . 6 Allied Co-Operators Incorporated . . . . . . . 7 BPW Financial Holdings Inc . . . . . . . . . . . . 8 CAPITA Financial Services Inc . . . . . . . . . . 8 CAPITA Insurance Brokers Inc . . . . . . . . . 10 Consolidated Financial Highlights . . . . . . 12 Management Discussion & Analysis . . . . . 14 Board of Directors’ Report . . . . . . . . . . . . 20 Independent Auditors’ Report . . . . . . . . . 32 Consolidated Financial Statements . . . . . 36 In response to the COVID-19 environment and the related changes it has brought upon us we took the opportunity to revisit and review our strategic plan in order to redetermine what is required to realise our vision of providing an unrivaledmember experience and becoming a group of companies consistently improving the livelihood of people and their communities. LOCAL. TRUSTED. Serving our communities ONE opportunity at a time. In recognition of the ongoing pandemic and the difficult and changing operating environment we faced, our operating plans reflected a transition frombusiness as usual to one focused on supporting, helping and providing solutions tomembers affected and displaced by the virus
BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED | CONSOLIDATED ANNUAL REPORT 2022 2
3 BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED | CONSOLIDATED ANNUAL REPORT 2022 Barbados Public Workers’ Cooperative Credit Union Limited (BPWCCUL) is a member based financial co-operative It therefore serves members only and focusses on providing financial services to individuals with the main goal of service to members CAPITA Financial Services Inc (CAPITA) is a wholly owned subsidiary of BPWCCUL and provides financial services to both individuals and corporates CAPITA focusses on increasing shareholder return through the provision of competitive financial products and services CAPITA Insurance Brokers Inc (CIB) is a wholly owned subsidiary of CAPITA Financial Services Inc , setup to provide an additional source of revenue and return for its shareholders and increase the value proposition for members and clients within the Group of Companies CAPITA Insurance Brokers Inc (CIB) is a wholly owned subsidiary of CAPITA Financial Services Inc , setup to provide an additional source of revenue and return for its shareholders and increase the value proposition for members and clients within the Group of Companies Organisational Structure HOLDINGS BPW Legacy Foundation is a registered charity and philanthropic armof Barbados PublicWorkers’ Co-operative Credit Union, its subsidiaries and associated companies Allied Co-operators Inc (ACI) is a wholly owned subsidiary of Barbados Public Workers’ Co-operative Credit Union Ltd Through a shared services partnership with the Barbados Co-operative & Credit Union League ACI aims to provide every League Affiliated Credit Union with affordable access to best-in-class assurance services, regardless of their size BPW Financial Holdings Inc was established to hold the shares of BPWCCUL’s subsidiary CAPITA Financial Services Inc
BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED | CONSOLIDATED ANNUAL REPORT 2022 4 Our Leaders President Sis. Jameela Hollingsworth Treasurer Bro. Courtney Gibson Director Sis. Lydia Lewis Vice President Bro. Mark Hope Director Sis. Cheryl Inniss Director Bro. Terrol Inniss Secretary Bro. Hasani Evelyn Director Sis. Julie Corbin Director Sis. Kieva Cadogan Meet the Board of Directors
5 BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED | CONSOLIDATED ANNUAL REPORT 2022 Member Relations Manager - Loans Bro. Philip Babb Manager, Management Information Systems Bro. Irwin Gibson Group Chief Executive Officer Bro. Glyne Harriison Card and e-Services Manager Sis. Sadie Austin Internal Auditor Bro. Eric Small Member Relations Manager - Savings Sis. Harriett Franklin Group Financial Controller Bro. LeVere Catlyn Chief Operations Officer Bro. Richard Kennedy Risk Manager Sis LaVerne Derrick-Watson Compliance Manager Sis. Wanda Massiah General Counsel Sis. Natalie Holder Meet the Management Team
BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED | CONSOLIDATED ANNUAL REPORT 2022 6 Trustee Mr. Cranston Browne Trustee Ms. Patsy Crichlow Trustee Ms. Ayodele Burrowes Trustee Mr. Courtney Gibson Our Leaders (Continued) Chairman Ms. Maureen Graham Programme Development Coordinator Mr. Hanif Moore Trustee Ms. Kieva Cadogan Meet the Management Team www.legacybarbados.org Meet the Board of Directors
7 BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED | CONSOLIDATED ANNUAL REPORT 2022 Secretary Mr. Barry Hunte Director Ms. Carole Eleuthere-Jn Marie Director Sis. Cheryl Inniss Chairman Mr. Mark Hope Operations Manager Mr. Damien Chase Internal Auditor Ms. Millicent Maximilien Director Ms. Jameela Hollingsworth Director Mr. Clint Hurley Director Mr. Keith Bourne Meet the Management Team CO-OPERATORS INCORPORATED Meet the Board of Directors
BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED | CONSOLIDATED ANNUAL REPORT 2022 8 Director Mr. Cameron Haynes Director Mr. Howard Lovell Secretary Mr. Hasani Evelyn Our Leaders (Continued) Director Mr. Lindell Earle Director Mrs. Kimberley Alleyne-Pinder Chairman Mr. Luther Jones Vice-Chairman Ms. Lydia Lewis FINANCIAL HOLDINGS INC. BPW Meet the Board of Directors Meet the Board of Directors Director Mr. Trevor Colluci Director Ms. Sandra Osborne Q.C. Vice-Chairman Mr. Terrol Inniss Director Mr. Andrew Brathwaite Director Ms. Luther Jone Chairman Ms. Carol Eleuther-Jn Marie
9 BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED | CONSOLIDATED ANNUAL REPORT 2022 Meet the Management Team Manager, Finance & Planning Mr. Terry Bonnett Card Manager Mrs. Sonia Hall-Hunte Director Ms. Sandra Reece Chief Executive Officer Mr. Paul Maxwell Director Mr. Courtney Gibson Secretary Ms. Melissa Goring
BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED | CONSOLIDATED ANNUAL REPORT 2022 10 Secretary Mr. Lindell Earle Meet the Board of Directors Meet the Management Team Director Mr. Clint Hurley Director Mr. Cornelius Bartlett Director Ms. Lydia Lewis Director Ms. Jameela Hollingsworth Director Mr. Frank Odle Operations Manager Ms. Cheryl Browne Chairman Mr. Courtney Gibson Our Leaders (Continued) INSURANCE BROKERS
11 BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED | CONSOLIDATED ANNUAL REPORT 2022 “ Over 300 dedicated staff serve our 107,500 members. As a credit union, our guiding philosophy of “People Helping People” came to the fore as we were classified as essential services and were called upon to provide service to our members throughout the many lockdowns and curfews and in the most difficult of circumstances. We could not have done this without the contributions of all of our staff. The Social Outreach Fund was created to provide charitable donations to members in need of financial assistance. $52,975 APPROPRIATED IN 2022 4.4%MEMBERSHIP INCREASE FROM 2021
BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED | CONSOLIDATED ANNUAL REPORT 2022 12 Consolidated Financial Highlights Financial Highlights - Five Year Review In Bds $’000 2022 2021 2020 2019 2018 Statement of financial position: Assets Cash and equivalents 388,880 362,535 279,870 216,110 112,849 Investments 51,512 51,263 53,688 61,974 76,711 Loans to Members (net) 1,398,822 1,330,140 1,311,851 1,235,760 1,174,576 Property and Equipment 62,176 61,604 61,852 59,772 59,741 Other Assets 30,363 22,357 19,530 18,476 22,011 Total Assets 1,931,753 1,827,899 1,726,791 1,592,092 1,445,888 Liabilities Deposits 1,699,399 1,616,272 1,527,678 1,400,074 1,259,922 External Debt 1,277 1,317 1,342 13,520 15,230 Other 45,492 36,352 30,606 27,362 23,277 1,746,168 1,653,941 1,559,626 1,440,956 1,298,429 Equity Share Capital 12,901 12,357 12,008 11,401 10,706 General& Other Reserves 171,314 160,361 151,057 139,597 126,948 Retained earnings 1,370 1,240 4,100 138 9,805 185,585 173,958 167,165 151,136 147,459 Total Liabilities and Owner’s Equity 1,931,753 1,827,899 1,726,791 1,592,092 1,445,888 Statement of income: Interest Income 103,466 100,004 106,307 104,657 101,056 Interest Expense 28,447 29,753 30,957 33,491 32,166 Net Interest Income 75,019 70,251 75,350 71,166 68,890 Other income 8,033 6,337 6,883 5,890 6,129 Net income and other income 83,052 76,588 82,233 77,056 75,019 Impairment loss on subsidiary 0 0 0 2,910 0 Impairment expense 7,377 10,071 6,445 4,151 6,942 Net operating income 75,675 66,517 75,788 69,995 68,077 Total operating expenses 63,458 55,932 56,383 54,441 49,778 Net income before extra-ordinary items 12,217 10,585 19,405 15,554 18,299 Derecognition of Government Securities - - 4,038 - Taxes 1,080 1,059 1,010 772 932 Net income after taxes 11,137 9,526 18,395 10,744 17,367
13 BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED | CONSOLIDATED ANNUAL REPORT 2022 2022 2021 2020 2019 2018 Financial statistics in percent: Asset Growth 5.68 5.86 8.46 10.11 9.92 Loan Growth 5.16 1.39 6.16 5.21 6.85 Deposit Growth 5.14 5.80 9.11 11.12 10.67 Net Surplus Growth 16.91 -48.21 71.21 -38.14 8.86 Return on Assets 0.59 0.54 1.11 0.71 1.26 Return on Equity 6.19 5.59 11.56 7.20 12.40 Operating Efficiency 83.85 84.09 74.40 77.78 73.12 Net Interest Margin 3.99 3.95 4.54 4.69 4.99 2022 2021 2020 2019 2018 Other statistics Delinquency ratio (%) 14.0 14.4 10.0 8.6 7.4 # of members 107.5 103.0 100.7 95.0 89.2 # of branches 6 6 6 6 5 2022 2021 2020 2019 2018 Net income per member $103.59 $92.49 $182.67 $113.09 $194.70 Consolidated Financial Highlights Financial Highlights - Five Year Review In Bds $’000 Principal Bankers Barbados Public Workers’ Co-operative Credit Union Limited - Republic Bank (Barbados) Ltd. BPW Financial Holdings Inc. - CIBC First Caribbean International Bank CAPITA Financial Services Inc. - CIBC First Caribbean International Bank CAPITA Insurance Brokers Inc. - First Citizens Bank (Barbados) Limited Auditors PricewaterhouseCoopers SRL Barbados
BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED | CONSOLIDATED ANNUAL REPORT 2022 14 credit union the financial services provider of choice as evidenced by the 96.0 percent service rating on the annual customer satisfaction survey. The increase in membership contributed to the credit union’s deposits growing by $78.8 million (2021 - $94.7 million) or 5.7 percent (2021 – 7.4 percent). At March 31, 2022 approved loan commitments and pending disbursements cumulatively totaled $97.4 million (2021 -$103.4 million) decreasing marginally from prior year by $6.0 million or 5.8 percent. During fiscal 2022, credit union net loans grew moderately by $60.3 million or 5.7 percent. Increases in mortgage loans was the primary driver of loan growth, with net mortgages growing by 66.6 million (2021- $36.9 million) or 17.7 percent (2021- 10.9 percent). Consumer loans growth declined for the second consecutive year; the decline for 2022 fiscal was 5.5 million (2021- $27.9) or 0.83 percent (2021- 4.0 percent). Business loans however showed marginal increase over the prior year by $105.6 thousand (2021- ($359.2) thousand) or 2.3 percent (7.1 percent). The credit union continues to record growth in other key areas of its balance sheet as evidence by the following: 2018 2019 2020 2021 89, 200 95 ,000 100,700 103 , 300 2022 107, 500 Resilience through COVID-19 Continuous member growth Member satisfaction Management Discussion & Analysis (MD&A) Group Overview: We are a group of companies committed to improving the livelihood of people and their communities. Born out of the cooperative spirit, our members and customers have been the driving force and catalyst behind our many achievements, including our growth and transformation over the past five decades. As we enter into our fifty-first (51st) year as a Credit Union and eleventh (11th) as a Group, we acknowledge and laud the foresight and vision of our founding members, and the support of our existing members and customers without whom, this journey would not have been possible. Adoption of New Accounting Standards During the fiscal ended March 31, 2022, there were no newly adopted or implemented accounting standards which had a significant impact on the reporting or performance of the Group. Snapshot of Credit Union’s Performance: In 2022, the credit union team of dedicated professionals assisted members by helping them identify appropriate financial solution to meet their needs. Amid challenging economic conditions, the Barbados Public Workers Co-operative Credit Union Limited membership grew by 4,531 or 4.4 percent to reach 107,506 during the financial year that ended March 31, 2022. With our success anchored to the quality of service we deliver, staff continued to focus their efforts on transforming the member experience to make the This MD&A provides a discussion and analysis of the financial position and performance of the consolidated operations of the Barbados Public Workers’ Co-operative Credit Union Limited and its subsidiaries (“the Group”) for the financial year ended March 31, 2022. This MD&A should be read in conjunction with the audited consolidated financial statements, which have been prepared in accordance with International Financial Reporting Standards (“IFRS”). The Group includes the parent, Barbados Public Workers’ Co-operative Credit Union Limited and its subsidiary Allied Co-operators Inc., BPW Financial Holdings Inc., the holding company for the CAPITA Group that includes subsidiaries Capita Financial Services Inc. (“CAPITA”) and Capita Insurance Brokers Limited (“CIB”).
15 BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED | CONSOLIDATED ANNUAL REPORT 2022 - Overall cash resources ended at $420.0 million (2021 - $387.7 million) representing growth of 8.3 percent. - Total assets grew by $96.0 million (2021 - $104.5 million) or 6.1 percent (2021 – 7.1 percent). Operational performance: - The credit union’s net surplus rebounded amid the challenges of the pandemic to grow by $2.2 million or 28.0 percent. Total interest income was recorded at $86.6 million (2021- $83.6 million) which was $3.0 million or 3.6 percent above that of the prior year. Interest expense was reported at $22.1 million (2021 - $23.2 million), which represented a $1.1 million or 1.6 percentage decline below that of the prior year. - Non-interest income increased by $858.5 thousand or 23.1 percent to end the year at $4.6 million (2020 - $3.7 million). Expected credit losses of $6.5 million decreased by $2.7 million or 29.7 percent below that of the prior year, while loans on non-accrual increased marginally from $147.0 million in 2021 to $154.4 million at March 31, 2022. - Total operating expenses reached $28.2 million (2021 - $23.9 million) at the end of the fiscal. Notable increases were reported in publicity and promotions which grew by 1.2 million or 61.0 percent, while maintenance to property and technology services increased by $1.1 million or 28.2 percent over that of the prior year. Snapshot of CAPITA’s Performance1 CAPITA Financial Services Inc.’s Group audit was not finalised and approved as at the time of this report and we are therefore unable to provide an accurate assessment of its 2022 statement of financial performance and comparisons to prior years at this time. Potential adjustments exist for interest income, ECL provisions and aged tax recoverable balances and collectively if realised these materially impact profitability. Management is currently working to reconcile these items which are currently recorded in the audit summary of unadjusted differences and their treatment will be determined by the end of the audit. Materially the final impact, whether realised or not, will be minimal to the Group consolidated position. From a statement of financial position perspective, CAPITA’s assets grew by just under 5 percent over the prior year to reach $327.7 million at March 31, 2022. The company has continued to advance its diversification into the electronic payments systems ecosystem of the financial services sector, partnering with the Co-operative and Credit Union Leagues in Barbados and St. Lucia. It has successfully deployed ATMs in St. Lucia and is currently managing a shared network solution for those participating credit unions, allowing for card interoperability between the entities. CAPITA is also embarking on upgrading the closed loop ATM card to an international Card Association branded debit card that will enable the members of participating Credit Unions to use their cards internationally, at any ATMs, POSs and online. The cards are expected to be launched during 2023. Locally, negotiations are continuing with credit unions and other entities to participate in the issuance of international Prepaid Debit Cards. This project, still in an early stage, is also scheduled for a 2023 completion. In addition to these card projects, CAPITA also recently made significant strides in being approved to be able to offer batched Automatic Clearing House (ACH) facilities to the Credit Union sector and to wider local corporate entities. These new ventures will provide additional non-interest income streams while assisting members and customers across the wider Group with being able to access a full portfolio of financial products and services. Group Performance Summary: The Group’s net income before levies and taxes for the financial year-end, March 31, 2022, was recorded at $12.2 million as compared to $10.6 million in the prior year. As economic activity increased during the fiscal and employment levels improved with persons returning to the workforce, delinquency returned to pre-Covid-19 levels. Consequently, expected credit losses relative to loans decreased from $10.2 million in 2021 to $7.5 at March 31, 2022, representing a 26.5 percent decrease. During the financial year ended March 31, 2022, the Group’s minimum deposit rate remained fixed at 0.5 percent ensuring that depositors receive a reasonable return for their patronage of the organisation. The net interest margin as a percentage of average assets stood at 3.99 percent as at March 31, 2022 compared to 3.95 percent in 2021. The Group’s levies on assets increased moderately by $32.3 thousand or 3.4 percent, while corporation taxes declined by $10.7 thousand or 10.9 percent. 2018 2019 2020 2021 2022 Deposits Deposits
BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED | CONSOLIDATED ANNUAL REPORT 2022 16 Net income after tax and levies for the year totaled $11.1 million compared to $9.5 million for the year ended March 31, 2021. Consolidated Financial Statement Highlights Revenues: For the financial year ended March 31, 2022, the Group earned total interest revenue of $103.5 million, representing an increase of $3.5 million or 3.5 percent over the previous year. Income generated from non-interest sources increased from $6.3 million in 2021 to $8.0 million in 2022, thus representing a $1.7 million 27.0 percent growth over the prior year. Consequently, net interest income moved from $70.3 million in 2021 to $75.0 million in 2022. This represented an increase of $4.7 million or 6.7 percent in net interest income over that of the prior year. Net income: The Group’s consolidated net income before levies and taxes grew to $12.2 million at March 31, 2022 as compared to $10.6 million in 2021. Operating Expenses: Total operating expenses inclusive of taxes increased from $57.0 million in 2021 to $64.5 million in 2022. The increase was principally driven by a rise in staff cost of $1.9 million or 8.8 percent Assets: Total assets of the Group stood at $1.93 billion at March 31, 2022. This represented an increase of $103.9 million or 5.7 percent over the previous year. Given the Group’s strong asset growth over the years it is projected that total assets will surpass the $2.0 billion mark by March 31, 2023. At March 31, 2022, the Group’s consolidated net loans and advances stood at $1.4 billion, an increase of $68.7 million or 5.2 percent over the prior year. For the second consecutive fiscal, loan growth was primarily driven by increase in the mortgage portfolio. Net growth in mortgages were $70.3 million or 12.7 percent while net consumer loans decreased by $0.4 million or 0.001 percent. The Group remained highly liquid with total cash resources of $408.4 million compared to $381.8 million in the prior year, an increase of $26.6 million or 7.0 percent. Asset Quality: The Group’s non-performing loans grew by $2.7 million in the 2022 fiscal versus overall portfolio growth of $77.2 million. Consequently, with greater growth in the overall loan portfolio than the non-performing loan segment, the delinquency ratio decreased to 14.0 percent at the end of March 31, 2022 compared to 14.4 percent at the end of March 31, 2021. While this rate has only moved marginally, we are committed to providing relief and solutions according to individual needs, and to assisting with working through the financial implications of the economic fallout. In this regard we recognize and 2018 2019 2020 2021 2022 Net Income Net Income Total Assets 2018 2019 2020 2021 2022 Total Assets Loans to members Loans to Members Management Discussion & Analysis (MD&A) (Continued)
17 BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED | CONSOLIDATED ANNUAL REPORT 2022 acknowledge the efforts of staff, in particular the Collection departments in providing members with appropriate payment options during these challenging economic times. Options available for members seeking relief include • extension of loan terms • converting outstanding interest to a separate loan; and • consolidation of debt Liabilities: The Group’s liquidity position continues to be strong and is primarily driven by the continued growth in deposits. At the end of the financial year, the Group’s deposits totaled $1.7 billion, an increase of $83.1 million or 5.1 percent compared to an increase of $83.6 million or 5.8 percent in the prior year. The Group’s only external borrowing was undertaken by the subsidiary, Capita Financial Services Inc. and at the end of the financial year, this remained at $1.3 million. Equity: As at March 31, 2021, the Group’s total equity rose to $185.6 million, representing an increase of $11.6 million or 4.1 percent compared to an increase of $6.8 million or 15 percent in the previous year. This increase included the issuance of $634.8 thousand in additional member shares (2021 - $430.6 thousand), and the distribution of $2.6 (2021- $3.6) million in dividends and interest rebates to members during the year. The Group’s capital adequacy ratios continue to be well above regulatory requirements. This ratio is a key measurement relative to the Group’s ability to absorb market shocks and as such is continually monitored on an ongoing basis. Economic Outlook 2022-2023 Fiscal The Central Bank of Barbados, in its January 27, 2022 Release indicated that the performance of the Barbados economy for fiscal 2022-23 will be heavily influenced by its continued vulnerability to external shocks, an acknowledging that as a tourism-dependent economy the strength of Barbados’ recovery will be intrinsically linked to that other countries ability to contain the spread of the Covid-19 pandemic. The preceding was stated within the context that the International Monetary Fund (IMF) has projected global economic growth of 4.4 percent, With increased vaccinations and the re-opening of economies to international travel the outlook for the tourism sector looks more favorable than during the height of the pandemic. As such it is anticipated that local economic activity will accelerate in the 2022 fiscal. According to the Bank all indicators are for partially strong growth in the first quarter, bolstered by the favourable impact of the influx of English visitors for the cricket tours. While the Bank has created various growth scenarios it remains optimistic that “absent the re-imposition of travel restrictions, or the deepening of the supply chain disruption, or significant geopolitical shocks, there is potential for a robust recovery leading to double-digit growth in 2022” The Government of Barbados has indicated its commitment to improving the business environment to enable further sustainable economic activity. It projects increased revenue and consequently, primary surpluses as extra-ordinary pandemic expenditures are reduced. Based on the Central Bank’s Released Government is welcoming the focus on infrastructure as a means to enhance the delivery of public services, while contributing to diversification, innovation and productivity within the economy. The Way Forward As a Group we go forward with optimism into a 2023 that is forecasted to bring about an improving operational environment underpinned by improved micro and macroeconomic conditions catalyzed by a revitalized tourism product, slowdowns in pandemic and other viral infections and projections of economic growth and related improvements in employment and domestic output. With those encouraging forecasts and signs before us, we must not forget the lessons of our Covid-19 years and the positive takeaways that came out of operating in such an environment. As a Group, all of our entities have been impacted by significant changes in their respective operating space. Manual delivery channels have been transformed to digital, and what was once considered normal and acceptable from a service delivery perspective has now become unacceptable in the face of heightened awareness and demands by members and customers who have experienced the immediacy and intimacy brought on by the Covid-19 environment. It is with this on mind that the Group’s continued focus and commitment to a common goal, and a well-articulated desired outcome is required to ensure success across all of our operating entities. 2018 2019 2020 2021 2022 Delinquency Ratio Delinquency Ratio
BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED | CONSOLIDATED ANNUAL REPORT 2022 18 To this end, and to ensure our ongoing success, we remain committed to the strategic principle determined for the Group i.e. for our Group of companies to be positioned as the leading indigenous financial services provider in the region, making a material difference to the social, environmental and economic wellbeing of our members, customers and the communities in which we serve, underpinned by our sustainable profitable growth. To achieve this objective as a Group, we must and will • acknowledge and implement the transitions that have to be done to ensure we not only remain relevant in the sector within which we operate, but also remain your financial services provider of choice and top of mind in all you do. • accept and embrace the adoption and use of efficient and effective technologies and digital platforms to deliver services to you in the manner that suits you best, acknowledging that this has to be coupled with greater intimacy delivered by passionate, enthused and committed staff. • continue to focus on completing our corporate redesign initiative to ensure our human resources and corporate structures are fit for the future, aligned to deliver on your expectations today but scalable to meet your demands of tomorrow. • continue to review our existing technology infrastructure and future technology investments to ensure we have the necessary systems, tools, products and services across the Group to deliver in the way that guarantees your expectations can be exceeded regardless of your financial circumstance. Additionally, across the Group we remain committed to continuation of work across four key strategic areas identified as critical for our long-term viability and sustainability: • Development of our people and a high-performance corporate culture - creating a constructive environment that fosters collaboration, accountability for individual and collective performance, and customer centricity. • Ensuring brilliant execution in our operations – we will continuously work on improving our business processes, policies and practices in line with the changing needs of the market and our financial commitments • Providing enhanced member and customer focus - we continue to grow by providing our members and customers with products, services and experiences that they value, delivered through the appropriate channel and entity. Our customer propositions are clearly aligned to the different markets and customer segments we serve across the Group. • Creating a sustainable and relevant future - we leverage our strengths and scale, build on our brand value and explore opportunities for profitable growth to ensure our Group’s business sustainability and future readiness. We also utilise our position and strong relationships to influence, advocate for and invest in social, economic and environmental change that benefits the members and customers of our operating entities. As we look ahead, we will continue to put our energies into delivering on these as part of our bigger commitment to supporting our members, customers and communities in their journey to unlocking financial opportunities. We look forward to what the new year will bring, but come what may, our focus will remain continued and constantly fixed on making a difference in your lives, and demonstrating through our actions that today, tomorrow, together, this is where you belong. Management Discussion & Analysis (MD&A) (Continued) Endnotes 1 CAPITA Financial Services Inc.’s Group audit was not finalised and approved as at the time of this report. As we reflect on the subsidiary’s performance, we therefore advise that the synopsis is being given based on the draft financials available as at the time of this report. There is a possibility that the final audited financials will be different to what has been reviewed to provide this synopsis and we therefore do not present it as a final position, but more so as an indicative one at this point in time.
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BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED | CONSOLIDATED ANNUAL REPORT 2022 20 Board of Directors’ Report Overview The financial year 2021-22 continued along the path of its predecessor by presenting a myriad of challenges not only for your credit union, but also for the country and all businesses operating in it As a nation and a people we continued to face the many different tests invoked by the ongoing Covid-19 pandemic which continued to impact us all in different forms and fashion In many instances a firm resolve to not let the challenging circumstances determine our outcome in the face of adversity underpinned by the strong and resolute bajan spirit was the difference at the individual level At the corporate level our focus continued to be on ensuring the physical and financial welfare of members and staff while partnering with and supporting and guiding Management to allow them to operate the business successfully In recognition of the ongoing pandemic and the difficult and changing operating environment we faced, our operating plans reflected a transition from business as usual to one focused on supporting, helping and providing solutions to members affected and displaced by the virus Operating within the context of an extended pandemic, while having its definite downsides, also afforded us the opportunity to recognize and celebrate achievements in the face of adversity The strength of leadership of our management team, and the teamwork exhibited by management and staff as we navigated the operational challenges arising out of the pandemic was key to ensuring you, our valued members, were able to enjoy as seamless a delivery of service as possible The Board recognizes and commends their efforts and also takes the opportunity to thank you for your patience, cooperation, continued commitment and support through what have been trying times Audit Transition Outside of the operational and economical challenges we faced during the past fiscal, the year was also particularly challenging from an audit perspective as the Group transitioned from its legacy auditors KPMG, to new auditors PwC as approved at the Special General Meeting of 12th March 2022. The transition was not without its challenges as this year’s audit proved to be our most challenging one to date, and one that tested and called upon all of our resources during the audit exercise. There was a learning curve for both sides and those learnings, new processes and adaptations to same caused us valuable time. In hindsight, there were things that could have been done differently and better by all but there is truth to the statement that hindsight is 20/20 as lessons have been learnt that will be used to bring about improvements as we go forward with our new audit partner. This year, for the very first time, we are hosting our AGM without all entities in the Group having completed their audit process. Audits have been completed for the parent company, the Barbados Public Workers’ Co-operative Credit Union Ltd, and its subsidiaries Allied Co-operators Inc., Legacy Foundation, BPW Financial Holdings Inc. and CIB Insurance Brokers. As at the time of the completion of this report the separate financial statements for CAPITA Financial Services Inc. (Barbados and St. Lucia), and the consolidated financial statements for the CAPITA Financial Services Inc. Group, while substantively completed, had not yet been finalized with the auditors nor presented to their Boards for approval. That notwithstanding, the impact of the CAPITA Financial Group numbers on the overall Barbados Public Workers’ Group’s consolidated numbers was sufficiently immaterial from an auditing perspective for the Barbados Public Workers’ Co- “ We are proud of what we have accomplished from an operational, member service and community perspective
21 BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED | CONSOLIDATED ANNUAL REPORT 2022 operative Credit Union Ltd’s separate and consolidated financial statements to have been finalized and approved by the parent Board in accordance with accounting standards. The non-completion, and by extension the non-approval, of CAPITA Financial Services Inc.’s financial statements prior to the AGM is however not aligned to our corporate standards nor good governance, and you are assured that this matter is currently engaging both the parent and subsidiary boards’ attention to ensure such a situation is not repeated. Credit Union Performance As we stood in the moment of our AGM of December 2021 and looked ahead to this financial period, we foresaw the need for continued caution and conservatism given our uncertainty about what the new norm would be like coming out of the height of the pandemic years. Our outlook, specifically that prospects of a fully recovered economy and the related benefits it would bring were optimistic and hopeful at best, was validated as the economy has continued to struggle to fully reopen and the primary sectors contributed at a shadow of their previous levels of performance. Despite the continued environmental and economic turmoil your credit union was able to perform admirably, recording strong business growth in a challenging environment. Management, fully guided and supported by the board, was able to make prudent business decisions that resulted in positive performance metrics as shown in the below highlights: Income Statement • Membership grew by 4,531 or 4.4 percent to reach 107,506 • Total income, comprised of interest and non-interest income, of $91.2 million was earned for the year ended March 31, 2022 - a 4.4% increase over the prior year • Total operating expenses for the year were reported at $52.3 million compared to prior year $46.9 million - an increase of $5.4 million or 11.5 percent • Net interest income (interest earnings on assets - loans and securities - less interest expense paid - lease liabilities deposits and wholesale funding - increased by $4.0 million or 6.7 % • Net operating income increased from $54.9 million in the prior year to $62.5 million - a $7.6 million or 13.9% improvement • Surplus for the year was recorded at $10.3 million, up from $8.0 million in the prior year – a 28% increase Statement of Financial Position • Asset growth was recorded at $96.0 million, a 6.1% increase, which resulted in total assets of $1.673 billion being recorded as at March 31, 2022 • Net loans and advances to members, primarily driven by mortgages, were $1.115 billion at March 31, 2022 - an increase of $60.4 million or 5.7 % over prior year. • Members’ deposits totalled approximately $1.453 billion at March 31, 2022 - representing growth of $78.8 million or 5.7%. Full details and commentary around the financial performance will be provided within the Treasurer’s Report and presentation. The Barbados Public Workers’ Co-operative Credit Union Ltd continues to be strong, stable and well capitalised, above the level set by the regulator and the Board and Management remain committed to delivering strong surpluses while providing a diversified portfolio of products and services to meet our members’ needs. Our commitment is to become more innovative and to deepen our relationships with you, acknowledging that the pandemic’s impact continues to run deep and affects everyone differently even at this stage. To support that commitment, our continued focus will be on providing workable and flexible solutions, whether through a product or service, for the varying circumstances you face. Subsidiary Performance Capita Financial Services Inc. CAPITA Financial Services Inc.’s Group audit was not finalised and approved as at the time of this report. This is a matter that is being taken very seriously by this board which has, and continues to express its disapproval and discontent about the matter to the subsidiary board charged with oversight of the CAPITA Financial Services Inc Group. We have mandated that the necessary work be done by all parties to ensure this unacceptable position is rectified within the very short term. In addition, we will also be conducting a review upon completion of the CAPITA audit, and will be taking the requisite and focused actions required to eliminate the root causes of this undesirable performance in order to avoid a repeat by any entity within the Group. As we reflect on the subsidiary’s performance, we therefore advise that the synopsis is being given based on the draft financials available as at the time of this report. There is a possibility that the final audited financials will be different to what has been reviewed to provide this synopsis and we therefore do not present it as a final position, but more so as an indicative one at this point in time. Based on the draft reports, at the end of the financial period ended March 31 2022, the CAPITA Group balance sheet had increased by 4.67% to $327.7 million dollars, up from the
BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED | CONSOLIDATED ANNUAL REPORT 2022 22 previous years ending figure of $313.1 million. Loans and advances constituted 86.7 percent of total assets accounting for $283.3 million while customer deposits which funded the loans accounted for 93.1 percent of the total liabilities. Total shareholders’ equity continued on a positive trajectory, increasing to $28.5 million; a 3.4% growth. From an income perspective the CAPITA’s Group net income decreased year on year by 24.2 percent to finish the period at $1.4 million versus the prior year’s $1.8 million. This $1.4 million was however negatively impacted by a material change in other comprehensive income that resulted in a $471.6 thousand offset against total income to bring it to $936.8 thousand for the reporting period; a 49.8% reduction. Of note, the CAPITA Group’s revenue lines improved across all areas during the past fiscal to record a 21.7 percent growth rate, but this was not significant enough to offset the 32.4 percent growth in operating expenses that fully eroded that revenue growth. From a product and services perspective, the CAPITA Group continues to focus on the diversification of its income stream through the provision of electronic payment services, and the strengthening of the operations of its group entities to ensure improved performance from both an operational and governance perspective going forward. There will be key business development and operational support recruitments to fix noticeable shortcomings in the coming fiscal period, and these operational changes coupled with implementation of the recommendations arising from the ongoing independent corporate governance review will help in realising the objective of improving the CAPITA Group’s performance and overall contribution. Allied Co-operators Inc. (ACI) In line with its mandate of assisting with the improvement of the regulatory compliance landscape and internal control environments of smaller credit unions, ACI officially began to provide services to the smaller Credit Unions in August 2021 following its introduction to the sector in the prior fiscal period. The sector was receptive of the services being offered by the subsidiary and as at the end of the reporting period ACI has provided services to approximately 50% of the total credit union movement in Barbados; a very commendable achievement in its embryonic years. ACI’s assistance to the smaller credit unions was primarily through the provision of recurring monthly compliance services. As recipient of these services smaller credit unions were able to improve their AML/CFT frameworks, enhance their internal governance through improved Board of Director understanding of compliance responsibilities, increase their understanding of the importance of adequately implemented policies and procedures and ultimately improve their level of regulatory compliance. ACI maintains a close working relationship with the Financial Services Commission and through respectful dialogue and interactions ensures that the relationship continues to positively develop which redounds not only to the benefit of your credit union, but also to the movement in general. The following testimonial speaks to the quality of service ACI seeks to provide on a consistent basis: “Allied Co-operators Inc. is the partner you need in your corner if you want your compliance needs to be taken care of promptly and professionally. We don’t know what we would have done without them in the face of increasing, sometimes overwhelming, compliance requirements. As a small credit union, we had no idea where to start when it came to getting the necessary policies and procedures in place. The Allied team came to our rescue, ensuring we fully understand the current AML/CFT landscape and the Board’s responsibilities. They helped us create an action plan and training schedule and they consistently walk us through everything step by step. More importantly, they keep us on track, never missing a beat so we always have up-to-date compliance information and stay on top of crucial deadlines. They are accommodating and always ready and able to come up with creative solutions that are easy for us to implement. Choosing Allied Co-operators Inc. to function as our Compliance Officer was the best decision we ever made.” 2021-2022 In Review Your Credit Union continued to be an anchor for our members, employees and communities throughout the past year and we did it in a way that demonstrated the strength and value of the Co-operative way, not operating for profit but to help to improve our members’ financial lives and support and enhance the communities in which we live and serve. 2021-2022 was a strong year for your Credit Union in this regard as our financial strength and stability allowed us to navigate the burdens and demands of an increasingly pressured financial services sector while meeting the ongoing and growing needs of our members and communities. Donations & Sponsorships We continually strive to support efforts in the communities we serve. This year to help our communities, we provided in excess of Barbados $120,000 dollars in support to over 50 individuals and organizations across a variety of areas during the period. Total sponsorship amounts disbursed to: Total Individuals $ 15 545 00 Schools $ 6,451 00 Organizations $ 103 224 95 Churches $ 2 395 00 $ 127615 95 This financial support aided in various areas and allowed the recipients and receiving entities to realize some of their set objectives. We see this assistance as being aligned with the key cooperative principle of concern for community and we will Board of Directors’ Report (Continued)
23 BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED | CONSOLIDATED ANNUAL REPORT 2022 Our Credit Union strives to create prosperity for the communities in which we serve continue to play our part in assisting our communities and citizens within those communities. Social Outreach Social outreach is important to us as we believe serving our members also means serving the communities in which they live and work. We completely understand and appreciate that our members are at different phases of life, and unfortunately there are some who are marginalized and who will require specific assistance with the basic activities others take for granted. Member economic participation at every level is the key to societal developmental and advancement, and in this regard we pay particular attention to those persons bold enough to ask for help when they need it most. In line with policy, assistance to members is considered across the following categories: • Medical procedures, tests, therapies, equipment or medication • Replacement of essential personal or household items lost due to fire or natural disaster • Funeral expenses • Circumstances where general personal financial hardship is present Our Social Outreach committee, comprised of a cadre of caring members, met over 15 times during the past year and provided assistance in the amount of $190,973.09 to 77 applicants. Distribution, by category, this year is as outlined below. Approved 77 Declined 37 Payments Deferred 4 Cancelled 6 Incomplete Requests 4 Referred (i e to Loans, Sponsorship etc ) 2 Total 130 In line with previous years the categories of medical expenses, food vouchers and funeral expenses continue to dominate requests for financial assistance, but in line with prevailing economic conditions and rising utility costs requests for assistance with utility bills i.e. utility are trending upward. Your credit union recognizes the hardships being faced by a section of our membership and will be reviewing other practical means that may be at our disposal to enhance member autonomy and independence. By providing impacted members with alternatives such as financial education and exposure to retooling opportunities we believe we can wean them away from what are supposed to be limited gratuitous payments under the social outreach scheme into more sustainable forms of income generation. Scholarships & Grants In keeping with its mandate to encourage the continuous development of members your credit union offers annual academic awards, scholarships and general education grant benefits on an annual basis. The Educational
BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED | CONSOLIDATED ANNUAL REPORT 2022 24 Board of Directors’ Report (Continued) Scholarships & Grants Committee met seven times during the reporting period and approved $323,079.00 for disbursement to 214 persons under the belowmentioned categories. Distribution, by category, this year is as outlined below. General Tertiary Level Grants $239 079 00 Annual Academic Awards $69,000 Ralph Boyce Scholarship Awards – 2 @ $7500 $15 00 Barbados Community College Awards (BCC) $0 Samuel Jackman Prescod Polytechnic (SJPP) $0 BIMAP – MOU Educational Partnership $0 Career Development Institute – MOU Educational Partnership $0 Total $323,079.00 Recipients of our 2022 academic awards and scholarships this year are as outlined as an appendix to this report. During the period, two new categories of scholarships were launched, and two Memorandums of Understanding that will provide additional support to members, by securing discounts on tuition fees and joint scholarships, with education institutions were signed. New Scholarships • Overcomer Scholarships – for local Secondary School leavers (3 Annually valued at $2,000.00, $4,000.00 and $6,000.00) − The winning student(s) must have overcome some degree of hardship throughout their schooling, due to extenuating circumstances i.e. academic, socioeconomic or physical hardship, yet demonstrate a level of determination and discipline to persist or overcome despite the challenges. − Student(s) must demonstrate the potential for continued success given the right opportunities and must have an interest in pursuing tertiary level studies immediately after graduation from Secondary School. • Sports and Arts Achievement Scholarships (2 Annually valued at $2,000 each) − This scholarship recognizes students who have excelled in, or contributed to the sports or arts scene at the national level or higher. Memorandums of Understanding • Barbados Institute of Management and Productivity (BIMAP) • Career Development Institute Congratulations go out not only to our special awardees, but also to all of our members who participated in any form of education or personal or professional development. We encourage all of our members to continue to seek out knowledge whether formal or informal. Data Privacy & Protection Barbados has implemented a comprehensive data privacy law, the Barbados Data Protection Act, in recognition of the increasing value of data in the region. The purpose of the Act is to regulate the collection keeping, processing, use and dissemination of personal data and to protect the privacy of individuals in relation to their individual personal data. As well as protecting the digital rights of its citizens, the Barbados Data Protection Act suitably positions Barbadian companies to exchange personal information easily with counterparts in the EU and the US. In line with the requirements of the Act and the responsibility placed upon it as a collector of personal information, your credit union was one of the few local companies to aggressively pursue the objective of compliance with the Act by way of an internal project that is anticipated to finish by April 2024. On conclusion of the project a framework consisting of a fully operational program of policies, procedures and tools will be in place that will: • achieve and maintain compliance with the Barbados Data Protection Act 2019 (BDPA2019) and by extension other international data protection regulations like the European Union’s General Data Protection Regulation (EU GDPR 2016/679). • protect the privacy of all members/clients and employees’ personal data. • guarantee the privacy rights of persons in relations to how the group processes their personal information. We acknowledge and respect your right to have your personal information protected and used fairly, lawfully and transparently for specified, explicit purposes in the manner and context for which it was provided. Once completed this project will ensure we operate in accordance with these rights by ensuring your information held by us is handled in a way that ensures appropriate security, including protection against unlawful or unauthorised processing, access, loss, destruction or damage. We will continue to update you as the project progresses.
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