10 BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED Other Income Other income increased by $154 thousand or 2.7 percent during the financial year to end at $5.8 million. This was primarily due to an improvement in legal income and bad debt recoveries, which increased by $437 thousand or 51.6 percent and $584 thousand or 49.6 percent, respectively. These increases were offset by negative movements in fee income, which declined by $811 thousand or 24.3 percent, rental income by $55 thousand or 33.0 percent, and dividend income by $100 thousand or 67.2 percent. Efficiency And Expense Management The Credit Union’s strategy during the financial year focused heavily on adding valued member services. This involved investing in expanded services, technological upgrades and enhancing member engagement initiatives. These improvements were aimed at strengthening member satisfaction and long-term loyalty, aligning with the organization’s mission to provide competitive member-focused financial solution. As a result of this strategic pivot operating expenses rose by $6 million or 9.8 percent over the prior year. This uptick in spending reflects the cost associated with service development, infrastructure upgrades and additional staffing and training to support the expanded offerings. However, while the enhancements aimed to drive longterm benefits, the short-term financial impact was evident in the Credit Union’s efficiency ratio, which increased from 87.5% in 2024 to 92.9% in 2025. Total Operating Expenses Total operating expenses for the year were reported at $67.7 million (2024 - $61.6 million), representing an increase of $6.0 million or 9.8 percent compared to the prior year. The increase in staff costs accounted for 56.3 percent of the increase in total operating expenditure. This was followed by other operating costs, which contributed 43.3 percent of the increase in total operating expenses. The breakdown of the key changes in Other operating expenses for 2025, with a comparison to the 2024 financial year, is outlined below: • Increases were recorded in the direct cost of services of $1.7 million or 44.8 percent, publicity and promotion of $1.4 million or 52.6 percent, office stationery and supplies of $245.8 thousand or 32.0 percent, and repairs and maintenance of $419.4 thousand or 6.5 percent. • Compensating reductions of $504.8 thousand or 21.2 percent were recorded in legal and professional fees, while security services, bank charges and social outreach expenses recorded decreases of $312.1 thousand or 14.3 percent, $412.4 thousand or 56.5 percent and $112.6 thousand or 49.7 percent respectively. Net Operating Income Net operating income increased by $2.4 million or 3.4 percent to end the year at $72.9 million. This was primarily attributed in part to a notable decrease in interest expense of $1.7 million or 8.9 percent. Another significant development was the decline in expected credit losses (ECL), which fell by $1 million— or 38.9%—as of March 2025. This improvement was largely driven by a $19.3 million (11.2%) reduction in non-performing loans, coupled with loan portfolios being assessed at discounted market values that exceeded their carrying amounts. Together, these factors contributed to a notable decrease in overall impairment losses, enhancing the Credit Union’s credit risk profile. Assets Asset growth of $50.2 million was recorded for the year ended March 31, 2025 and was above prior year’s growth of $37.6 million. The Credit Union’s assets have grown by $234.4 million or 14.9 percent over the last five years to reach $1.8 billion at March 2025. Net loans and advances to members were $1.128 billion, inclusive of the required allocation for expected credit losses which this year carried an overall ECL allowance of $35.9 million and interest receivable from loans of $10.5 million. This compares to $1.132 billion inclusive of an expected credit loss allowance of $39.6 million and interest receivables of $9.1 million at the end of the 2024 financial year. Net loans therefore, declined by $3.8 million or 0.3 percent over the prior year. Further analysis showed that increases in mortgage loans were the primary driver of loan growth, with net mortgages growing by $20.8 million (2024 - $21.7 million) Loans to members Total Assets 3 Total Assets Management Discussion & Analysis (MD&A) (Continued)
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