Home' Trinidad and Tobago Guardian : August 14th 2014 Contents BG6 NEWS
BUSINESS GUARDIAN www.guardian.co.tt AUGUST 2014 • WEEK TWO
With the largest net-
work of branches,
market share and
Credit Union Co-
operative Society Ltd (ECU) is the leader in
its sector, Caribbean Information and Credit
Rating Services Ltd (Caricris)---the Caribbean
regional credit rating agency---said in its latest
rating released August 4.
Caricris reaffirmed the ratings of CariBBB-
(foreign and local currency) on its regional
rating scale, and ttBBB- on the T&T national
scale for ECU. The ratings, four notches below
the highest and five above the lowest, "indicate
that the level of creditworthiness of this obligor,
adjudged in relation to other obligors in the
Caribbean and within T&T is adequate," the
credit rating agency said.
Caricris said the factors supporting these
ratings are: a leading market position in the
T&T credit union sector; continued healthy
financial performance, though tempered by
low loan loss provision appropriations; suf-
ficient liquid assets to comfortably meet short-
term obligations; adequate risk management
structure and systems, though they could be
enhanced with more specialised experience
on the board and statutory committees.
"ECU has the largest membership base of
the T&T credit unions with over 160,000
members as at March 2014," Caricris said. "Its
bond is national, and it is therefore able to
accept new members from any industry or
location in the country. It is also one of the
larger credit unions based on assets in the
English-speaking Caribbean, with total assets
of $1.6 billion as at December 2013."
ECU commanded an approximate 15.5 per
cent share of the T&T market with total assets
of $1.5 billion as at December 2012, Caricris
ECU has the widest branch (nine in total)
and automatic teller machine (ATM) networks
(14) in T&T.
"Its brand is strong and well-known in the
domestic credit union industry and the wider
financial sector," the agency said.
ECU has developed a reputation for being
a pioneer of new products and services in the
local credit union movement, Caricris said. It
was the first credit union to offer ATM services,
and also to join the LINX network. In May
2014, it began offering Internet and mobile
phone banking services to its membership.
ECU offers a wide range of products and serv-
ices compared to its leading peers in the credit
union industry, the agency said.
"It continues to have high customer satis-
faction results, with an improved overall sat-
isfaction score of 85.9 per cent based on a
December 2013 survey, relative to a score of
80 per cent a year earlier," Caricris said.
"Somewhat tempering the institution s
strong market position is its single-country
concentration in that it operates solely in the
highly competitive T&T financial sector. This
market is dominated by the commercial banks,
and over recent years these institutions have
been actively seeking to attract credit union
members, with some degree of success."
Consequently, ECU has been using its cus-
tomer satisfaction survey and other feedback
mechanisms to ensure that its products and
services remain attractive and competitive,
the agency said.
Net interest income rose by 3.3 per cent to
$130.1 million in 2013 from $125.9 million in
2012, while non-interest income also increased
by 29.3 per cent to $19.9 million compared to
$15.4 million in the prior year due to improved
fee and other income, Caricris said.
Higher profits than peers
The improvement in non-interest income
was a consequence of loan growth as well as
higher commissions earned from the sale of
the financial products of ECU s strategic part-
ners, the ratings agency said.
"As a result, total income grew by 6.2 per
cent to $150.1 million in 2013 from $141.3 mil-
lion in 2012. ECU s total income for 2012 far
exceeded the regional credit union sample
average of $61.1 million in 2012."
ECU was said to have "a good revenue mix,"
with net interest income accounting for 86.7
per cent of total income, followed by fee income
at 7.3 per cent, other income at 4.9 per cent
and rental income at 1.1 per cent.
Total operating expenses increased by 3.9
per cent to $95 million from $91.5 million in
the previous year. Caricris said this was largely
attributable to staff-related expenses, which
rose by 12.8 per cent to $50.1 million following
the settlement of collective bargaining pay-
ments for the period 2010-2012. This was
somewhat offset by declines in other expenses
and depreciation of 1 per cent and 21.9 per
cent to $38.8 million and $6.2 million respec-
tively, the agency said.
Notwithstanding the growth in expenses,
the efficiency ratio improved slightly to 63.3
per cent from 64.7 per cent, as a result of the
faster rate of total income growth. ECU s three-
year average efficiency ratio of 62 per cent for
2011-2013 was slightly better than the com-
parative average of 66.5 per cent for Caricris
sample of regional commercial banks. Oper-
ating profit improved by 10.4 per cent to $55.1
million in 2013 from $49.9 million in 2012.
ECU realised a gain of $3.9 million from
the sale of fixed assets, while also incurring
a 54.1 per cent lower loan loss provision
expense of $4.1 million, and a $5.4 million
investment impairment charge, Caricris said.
The resulting net surplus of $47.1 million in
2013 was up 17.5 per cent from 2012, while
return on assets (ROA) improved to 3 per cent
from 2.8 per cent in the prior year. ECU s net
surplus of $40.1 million in 2012 was the second
best in the regional credit union sample, Cari-
Total assets increased by 8.2 per cent year
on year (y-o-y) to $1.6 billion in December
2013, attributable to growth of 8.4 per cent
in net loans to $1.1 billion, while investments
increased by 13.3 per cent to $359.7 million.
The loan portfolio is very diverse, with the
top 20 loans accounting for less than 8 per
cent of the total portfolio. The concentration
in the investment portfolio was greater, with
the top 10 investments representing 53.4 per
cent of the portfolio, Caricris said.
Caricris said the top four investments, how-
ever, which accounted for 32.3 per cent of the
portfolio, were comprised of relatively low-
risk money market mutual fund holdings.
The continued profitability enhanced ECU s
tangible net worth (TNW), which grew by 11.3
per cent to $158.9 million in December 2013
from $142.8 million 12 months earlier. Divi-
dends of $32.6 million were paid for 2013,
which equated to a dividend payout ratio of
69.2 per cent, up marginally from 65.5 per
cent in 2012.
Eastern is T&T's
leading credit union
Continued on Page 7
Its bond is national, and it is therefore able to accept new members from any industry or
location in the country. It is also one of the larger credit unions based on assets in the
English-speaking Caribbean, with total assets of $1.6 billion as at December 2013.
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