11 SEPARATE FINANCIAL STATEMENTS 2024 The break-down of the changes in Other operating expenses for 2024, with a comparison to 2023, is outlined below: • Increases were recorded in direct cost of services of $1.9 million or 100.1 percent, membership security of $647.2 thousand or 12.5 percent, bank charges of $543.5 thousand or 292.3 percent, office stationary and supplies of $537.4 thousand or 232.2 percent, and repairs and maintenance of $393.2 thousand or 6.5 percent. • Compensating reductions of $1.2 or 34.4 percent were recorded in legal and professional fees, while meetings and conferences, utilities and publicity and promotion recorded decreases of $375.3 thousand or 29.4 percent, $299.2 thousand or 15.9 percent and $196.7 thousand or 6.8 percent respectively. While routine maintenance of property, plant and equipment occurred during the reporting period, there were no significant upgrades which merited capitalisation and hence depreciation expenses decreased by $577.8 thousand or 13.5 percent. Net Operating Income Net operating income increased by $1.3 million or 1.9 percent, recording an end of year position of $70.4 million. This was primarily attributed to a notable decrease in interest expense of $1.6 million or 7.7 percent, an increase in other income of $796.7 thousand or 16.4 percent, and a decrease in expected credit losses (ECL) of $2.1 million. While there was a marginal increase in non-performing loans, the associated discounted market values of the collateral associated with those loans were higher than their carrying values and this positive position resulted in lower overall impairment losses. Assets Asset growth of $37.5 million was below the prior year’s growth of $50.5 million. The Credit Union’s assets have grown by $288.6 million or 27.5 percent over the last five years to reach $1.8 billion at March 2024. Net loans and advances to members were $1.132 billion, inclusive of the required allocation for expected credit losses which this year carried an overall ECL allowance of $39.6 million. This compares to $1.146 billion inclusive of an expected credit loss allowance of $40.7 million at the end of the 2023 financial year, resulting in a reduction in Net loans by $14.6 million or 1.3 percent over the prior year. Loan growth during the past year was primarily driven by an increase in mortgage loans, with net mortgages growing by $21.7 million (2023 - $45.8 million) or 4.4 percent (2023 - 10.3 percent). Outside of mortgages, the appetite for loans continues to be sluggish as there was a decline in consumer loans of $37.0 million (2023- $13.9 million) or 5.7 percent (2023 - 2.11 percent) and business loans contracted marginally by $552.2 thousand (2023 - $1.1 million) or 14.8 percent (2023 – 22.2 percent). Asset Quality Loans 90 days or more past due increased by $10.0 million or 6.2 percent during the period while nonperforming loans (90 days and over) were $172.6 million or 14.8 percent of the gross loans’ portfolio of $1,162 billion. Delinquent loans between 31 to 89 days decreased by $13.3 million or 32.9 percent to move from $40.3 million to $27.0 million, while loans less than 31 days past due decreased by $13.8 million or 1.4 percent. Given the cumulative impact of the movements, expected credit losses in relation to loans decreased by $2.4 million or 49.3 percent to move from $4.8 million in 2023 to $2.4 million at March 31, 2024. The delinquency rate moved from 13.8 percent to 14.8 percent at March 31, 2024, due to the increases in non-performing loans (the numerator) whilst the gross loan portfolio (the denominator) contracted during the reporting period. Loans to members Asset Growth Delinquency Ratio
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