LETTERKENNY Credit Union had to review how it does business following a surge in savings sparked by the closure of Ulster Bank and KBC branches.
Account holders were forced to withdraw their cash when the financial giants announced they were shutting their operations down.
Many turned to their local credit unions, a rush that placed extra pressure on a model reliant more on lending than lodgements.
To absorb the boom Letterkenny Credit Union reduced its savings cap from €30,000 to €25,000 cap in July. A monthly lodgement threshold of €7,000 was also activated.
Speaking at the organisation’s end of year meeting, Chief Executive Gordon Randles said a change in spending patterns brought about by the pandemic was a further driver in the growth in savings, as were a lack of attractive investment opportunities and a fear of negative interest rates.
He said, “Although Letterkenny Credit Union is proud that members see the credit union as a trusted location for their savings, the savings growth of more than €25 million over three financial years could not be sustained given the depletion of our capital reserve percentage.
“The increase in savings held also had a negative impact on the cost of levies imposed on the credit union which are directly linked to the CU asset size.
“In July 2022 the board of directors took action to reduce savings growth and curtail future growth by introducing a savings threshold of €25,000 and a monthly lodgement cap of €7,000. This is to improve the strength of the credit union’s balance sheet over the next three years.”
Outlining some of the headline figures of the past 12 months, Chairperson Ciaran Haran said that Letterkenny now had over 25,000 members on its books.
It has in excess of €100 million in members’ shares while at nearly €35 million, the loan book is at its highest level ever.
Mr Haran also revealed that 2022 saw Letterkenny Credit Union negotiate its first mortgages.
On the decision to introduce a monthly lodgement limit, he said it was not done lightly.
“These were not easy decisions but thankfully they have resulted in a strong year end position.”
Mr Haran said that while Covid and the uncertainties it created have largely subsided, the pandemic has been replaced by fresh concerns.
“The new challenges presented by way of inflation and the cost of living crisis have continued to make our economic environment unpredictable and unsettled.”
Loan growth and loan income remain the backbone of the credit union.
Gordon Randles said Letterkenny was always open to anyone thinking about borrowing.
“Despite the challenges of 2022 we issued almost €19 million in lending within our community. Our loan rates continue to be very competitive when compared to other lenders and we would encourage all members to consider us first when borrowing,” he said.