Home' Trinidad and Tobago Guardian : July 26th 2015 Contents JULY 26 • 2015 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
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Following the demise of
Bermudez Biscuit Compa-
ny Employees Credit
Union, a new entity---East-
ern Credit Union (ECU)---
emerged in April 1973.
Since then, Eastern has
grown by leaps and bounds
and now provides its financial and allied serv-
ices to its thousands of members from ten
locations, including Tobago.
In addition to the traditional services of
shares, deposits and loans, ECU is an agent
for the Unit Trust Corporation and Colfire
Insurance. It also provides a suite of protections
services from CUNA Caribbean Insurance, the
most recognised product being the Family
Indemnity Plan, which is a funding mechanism
for funeral expenses.
ECU s services also include an ATM "Sprint"
card and it operates a bureau de change for
foreign currency. In short, many of the tra-
ditional services previously offered exclusively
by commercial banks.
However, unlike a commercial bank, its serv-
ices are provided exclusively to its members,
which is the essence of a co-operative organ-
Although ECU has a non-credit union sub-
sidiary, EPL Properties Ltd, which owns the
La Joya Complex in St Joseph, this discussion
will focus solely on to its credit union activ-
We will now review ECU s results for the
year ended December 31, 2014.
Changes in financial position
Total assets rose from $1.63 billion to $1.76
billion last December, reflecting an increase
of 8.33 per cent.
Total cash resources increased to $259.5 mil-
lion from $214.8 million. Cash in hand rose
from $79.9 million to $128 million. The pro-
ceeds from the disposal of motor vehicles,
amounting to $153.8k, contributed to this pos-
itive change; this transaction also triggered a
profit of $28.74k.
On the one hand, current and savings
account balances climbed to $118.5 million
from $68.8 million. Conversely, cash in hand
moved from $11.1 million to $9.5 million last
Short-term investments declined modestly
to $131.5 million from $134.9 million as at
year-end 2013. There were three notable
changes that accounted for the bulk of the
net fall. First, its fixed income paper issued
by First Citizens Investment Services Ltd con-
tracted to $3 million from $8 million. Next,
the value of its
Roytrin Money Market Fund rose to $29.1
million from $28.6 million. Finally, its deposits
with ANSA Merchant Bank Ltd moved from
$33.58 million to $33.98 million.
Other major assets were long-term invest-
ments and loans to members.
Long-term investments declined marginally
to $283.2 million from $286.9 million. The
society s largest non- bond holding is its EPL
Properties ltd, which was valued at $59.1
million for both periods.
Another major holding is the El Tucuche
Fund managed by the First Citizens Bank; this
value moved from $27.4 million to $27.77 mil-
Significantly, the Credit Union sold its entire
holdings in both SavInvest India Asia Fund
($3.59 million) and SavInvest Structured Fund
($13 million), both sponsored by Bourse Secu-
rities Ltd. From these proceeds, $5 million was
then invested in Ansa Merchant Bank Ltd.
ECU also had large holdings in Republic
Bank Ltd ($11.56 million), Clico Investment
Fund ($7.37 million), First Citizens Bank ($5.61
million) and Massy Holdings Ltd ($3.86 mil-
Among its largest bond holdings are those
issued by the GORTT ($61.2 million), T&T
Mortgage Finance Company ($28.75 million)
and Nipdec ($10 million). Meanwhile, its hold-
ings of TSTT bonds contracted to $5 million
from $13.42 million as at December 2013.
Its largest asset, loans to members, increased
by 8.55 per cent to $1.157 billion from $1.066
billion. During 2014, the provision for loan
losses increased to $14.8 million (2013: $4.1
million) while the amounts written off declined
to $10.9 million from $13.2 million.
Similar to other commercial lenders, the
Society grants loans for provident purposes,
such as, housing, vehicle purchases, and the
acquisition of appliances and for other personal
Total liabilities increased from $1.46 billion
to $1.58 billion or by 7.9 per cent.
In keeping with International Financial
Reporting Interpretation Committee interpre-
tation # 2, redeemable (non- permanent)
shares are treated as liabilities. These shares,
which are the largest component of liabilities,
rose to $1.21 billion from $1.13 billion or by
6.8 per cent. Also, members deposits advanced
by 12.1 per cent to $324.4 million; the 2013
figure was $289.3 million.
Improvements in members' equity
Total members equity advanced to $185.5
million from the previous level of $166.3 mil-
All members are required to purchase 8 per-
manent shares at $25.00 each; this constitutes
the permanent capital of the Society. As at
December 2014, this figure was $19.55 million
or 5.1 per cent greater than the 2013 balance
of $18.6 million.
The reserve fund improved to $81.9 million
from $76.4 million. In contrast, the education
fund declined to $115,300 from $756,900; this
was because expenditure exceeded the current
year s allocation by 43 per cent.
The Small Business Development Company
Fund was unchanged at $1.69 million.
Meanwhile, the investment re-measurement
reserve declined to $10.98 million from $11.34
million. This figure is used to capture the
unrealised gains or losses on available-for-
In line with higher profits, undivided earn-
ings rose from $57.5 million to $71.1 million.
Income and surplus
Total income advanced by 6.9 per cent to
reach $161.7 million from 2013 s $151.3 million.
The largest component was interest on loans,
which expanded by 7.1 per cent to $134.2 mil-
lion from $125.4 million.
Investment income rose to $9.96 million
from $9.27 million or by 7.5 per cent.
Other income of $17.5 million was 5.2 per
cent higher than the $16.6 million earned for
2013. The largest component was loan pro-
cessing fees, which advanced to $9.64 million
from $9.41 million or by a modest 2.5 per
cent. A new element, loan late fees, garnered
$1.65 million (2013: NIL).
Loan and investment income relating to
EPL Properties declined to $3.3 million from
$3.99 million. Meanwhile, commissions from
CUNA climbed by 82.4 per cent to $1.27 million
Miscellaneous income contracted by 49.1
per cent to $824.3k from $1.62 million.
Total expenditure rose by half a per cent
point to $106.3 million from $105.8 million.
The two major components, administrative
expenses and personnel costs, exhibited oppos-
Administrative expenses climbed to $60.6
million from $55.9 million or by 8.4 per cent.
Among the notable increases were net loan
loss expenses (2014: $14.8 million; 2013: $4.1
million); insurances (2014: $5.75 million; 2013:
$3.53 million); computer supplies and expenses
(2014: $1.69 million; 2013: $1.1 million); edu-
cation supplies and expenses (2014: $2.14 mil-
lion; 2013: $1.1 million).
The two most significant declines were loss
on investments (2014: NIL; 2013: $5.4 million)
and reversal of provisioning (2014: NIL; 2013:
Total personnel costs fell to $41.2 million
from $46.7 million. Salaries and other staff
benefits declined to $40 million from $45.7
million. In contrast, travelling and subsistence
rose to $1.21 million from $1.05 million.
Marketing expenses rose to $2.86 million
from $1.96 million while finance costs increased
to $396k from $318k.
There was a robust 44.9 per cent increase
in board and committee expenses, which closed
2014 at $1.27 million from $878k.
The most prominent movement was the
stipend paid to these officials, which jumped
by 43.1 per cent to $885k from $618k. Meeting
expenses climbed by 50.2 per cent; in dollar
terms, this represented a movement to $283k
from a previous level of $188.6k.
The net effect of these changes saw ECU
deliver a net surplus of $55.38 million; this
was 21.7 per cent greater than the $45.5 million
recorded for 2013. (Credit unions are tax-
Dividends and interest rebate
Based on these improved results, Eastern
recommended a dividend of $38.2 million
along with an interest rebate of $6.5 million.
This compares favourably with a total payment
(dividend and rebate) of $36.84 million for the
2013 fiscal period.
Changing legislative environment
As part of the modernisation of the finan-
cial and allied sectors, updated legislation
has been drafted for the credit union sec-
tor.It was unfortunate that, many years ago,
the League did not take a leading and proac-
tive approach to the legislative reform process;
consequently, this role fell, by default, on to
the Central Bank, which naturally has a
"banking perspective" on the reform process.
The Credit Union League, which is the
umbrella organisation for the sector, has a
different script. It projects credit unions as
being part of the "People s Sector", which
should not be "contaminated" or "muzzled"
by the heavy hand of Central Bank regulation.
It objects to Credit Unions being regulated
as if they were banks.
Instead, it wants an expanded and more
robust role for its traditional regulator, The
Commissioner for Co- operative Develop-
ment and is now (belatedly) in the process
of finalising counter proposals to that which
appear on the Central Bank s Web site. The
League also wants one, not two, regulators.
One certainty is that the number of credit
unions is likely to decline as the onerous
cost of complying with new regulatory
requirements will make it difficult for small
societies to generate a surplus. This consol-
idation process has already started to happen.
ECU will definitely be one of the survivors.
Eastern Credit Union's 2014 results
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