2023 Annual Report - Flipbook - Page 20
20 Credit Union Annual Report 2023
Pro昀椀t
Financial & Economic
Performance
The 昀椀nancial year 2022/23 re昀氀ected exponential growth, with loan
disbursements up 30% for the 昀椀rst half of the year and up 41% for
the second half of the year, resulting in an overall increase of 29%.
The demand for loans with long-term stability and signi昀椀cantly
lower interest rates and lending fees was primarily due to soaring
rate increases in the local market led by the rate increases from the
United States Federal Reserve. As we approached the second half
of our 昀椀nancial year, we saw signs of potential strain on our
organisation due to the high demand for appointments for
members who wanted to switch their mortgages from other
昀椀nancial institutions to our Credit Union. We began implementing
measures designed to moderate the pace of lending growth and
strategies to boost our excess liquidity.
“
Overall, we delivered strong 昀椀nancial
results in 2023, 昀椀nishing ahead of our
targets for net income and net lending
growth.
Net income of $16.7M (2022: $12.2M) increased by 36%; this was
mostly driven by 21% increase in loan interest income, 600%
increase in 昀椀xed deposits placed with banks, and offset by 39%
decrease in non-interest income and a 25% increase in noninterest expenses.
The 21% (2022: 9%) increase in interest income was mainly due to
the 17% (2022: 12%) increase in total loans net of provisioning. The
delinquency rate reached a historical low, below 1%, at 0.51% as
we continue to improve our lending practices and manage credit
risk.
The 600% increase in interest earned on bank placements resulted
in a return on interest income earned on average bank
placements of 3.2% for the year ended 31 July 2023 (2022: 0.53%),
a substantial increase of 504% due to the increase in rates in the
market.
The increase in income was offset by a 39% decrease in noninterest income relating to an unrealized loss on fair value equity
investments of -$697K (2022: gain of $163K), which was due to the
signi昀椀cant reduction in the market value of shares held in local
equity investments.
The 25% increase in non-interest expenses also had an impact on
net income, mainly due to a 24% increase in personnel expenses
and a 26% increase in general and administrative expenses. These
increases were mostly due to realigning personnel costs based on
a market survey and strengthening our information technology
environment.
All key ratios were positively impacted by the growth in pro昀椀tability,
with returns on assets and equity up 24% and 21%, respectively,
and the ef昀椀ciency ratio improving by 7%.
Our ef昀椀ciency ratio measures how much we spend on our
operations to generate a dollar of revenue and is calculated by
dividing total operating expenses by our operating income. It’s
expressed as a percentage, and a lower number is better. This
ratio decreased in 2023 by 7%; strong revenue growth and
effective management of our operating expenses helped improve
our ef昀椀ciency ratio and returns on assets and equity.
As we look ahead to the 昀椀nancial year 2023/24, we expect the high
demand for our loan and competitive deposit products to continue.
We have taken action to strengthen our 昀椀nancial position and
protect our assets while ensuring that our Credit Union, “The Little
Engine That Could”, will continue to be successful.