Credit union deposits up 9.06%, Estudios Técnicos index confirms
Puerto Rico’s credit unions had a good first quarter of 2022, including a 9.06% increase in its industry-wide deposits, the Credit Unions Financial Stability Index, prepared by Puerto Rican firm Estudios Tecnicos Inc., confirmed.
The index also shows improvement in the sector’s solvency, profitability, liquidity and increase in partners.
“The credit union industry continues to perform very well and figures for the financial stability index shows a stable behavior,” said Leslie Adames, director of the Estudios Tecnicos Economic Analysis and Policy Division.
“The value of the index stood at 0.77 in the first quarter of 2022 vs 0.53 in the first quarter of 2021, although sequentially it decreased to 0.82 in the fourth quarter of 2021,” said Adames.
The index fluctuates between 0 (financial fragility) and 1 (financial strength).
The financial health of the credit union industry is measured with four criteria: liquidity, solvency, asset quality and profitability.
Adames explained that the number of partners has continued to increase consistently at 24,905 in the 12-month period ending in the first quarter of 2022, for a total of 1.11 million members at the end of March.
Another good sign of asset quality is that the credit union default rate continues to decline.
“Figures for the first quarter of 2022 show a delinquency rate of 2.04% compared to a delinquency rate of 2.51% in the first quarter of 2021,” said Adames.
“The industry maintained a level of coverage — provisions for non-performing loans — of 130.45% in the first quarter of 2022 vs. 98.35% in the first quarter of 2021,” said Adames.
The liquidity of the credit unions remained stable with a ratio of loans to deposits of 69.49% in the first quarter of 2022 vs 69.84% in the first quarter of 2021.
The balance of loans increased 8.5% annually in the first quarter of 2022, while total deposits increased 9.06%.
The capital ratio, excluding cooperative member shares, to total assets stood at 5.37% in the first quarter of 2022 vs 4.92% in the first quarter of 2021, the index showed.
Regarding profitability, the return on assets improved from 0.72% in the first quarter of 2021 to 0.90% in the first quarter of 2022, Adames said.
However, the net margin of intermediation stood at 3.61% in the first quarter of 2022 vs. 3.74% in the first quarter of 2021, although sequentially it improved 10 basis points.
Adames explained that the upward adjustment in interest rates could improve returns on the asset side.