Puerto Rico’s credit unions show ‘notable improvement’ in 2023
The financial standing of Puerto Rico’s credit has shown a “significant improvement” in the last two quarters of this year, according to the most recent figures of the Credit Unions Financial Stability Index prepared by Estudios Técnicos Inc. (ETI).
“The value of the index stood at 0.79 in the second quarter of 2023 compared to 0.69 in the second quarter of last year,” said economist Leslie Adames, director of ETI’s Economic Policy and Analysis Division.
“This improvement is attributable to two main factors: first, an annual increase in return on assets from 1.04% to 1.31% and second, the improvement in the industry solvency to capital ratio (excluding shares) to total assets increasing from 5.33% to 5.93% for the period,” he said.
The index fluctuates between 0 (financial fragility) and 1 (financial strength). It measures the financial health of the credit union industry against four criteria: liquidity (total loans/deposits), solvency (capital to total assets), asset quality (nonperforming loans/total loans), and profitability (return on assets, or ROA).
Another positive aspect for the credit unions this year is the quality of assets that remains stable, according to the most recent figures published by the Cooperatives Supervision & Insurance Corp. (COSSEC, in Spanish), the regulatory body that oversees credit unions in Puerto Rico, the analyst firm noted.
The delinquency rate remained relatively stable, increasing from 1.97% to 1.99% for the period. However, although the industry’s liquidity remains at reasonable levels, the ratio of loans to deposits increased from 72.92% in the second quarter of 2022 to 81.86% in the second quarter of 2023, reflecting the sustained growth in lending activity the industry has seen over the past few quarters.
“Industry loan investment increased by $799.8 million to $6.7 billion in the second quarter of 2023, while total deposits increased by $89.3 million to $8.2 billion in the period,” Adames added.
Lastly, the number of partners continued to rise compared with the second quarter of last year. There was an increase of 21,763 new members, for a total of 1.1 million in the quarter that ended in June 2023, and a gain of 6,596 members quarter to quarter.
