No dividend payout by NMCU this year
The recently rebranded North Midlands Credit Union (NMCU) will not be paying out a dividend to its members this year due to “operational and financial pressures”.
Now one of the largest credit unions in the country, NMCU generated a surplus of €1.4m, down from €2.8m in the previous year – however, the surplus this year would have been €3.2m, its annual report states, if the credit union hadn’t taken a financial hit of €1.8m following the Irish League of Credit Union’s (ILCU) decision to close its Defined Pension Scheme.
Another external pressure that influenced the decision not to pay out a dividend this year is the Central Bank’s requirement that credit unions increase their Regulatory Reserves by a minimum of 10% of any increase in total assets.
In his message to members in the NMCU annual report, chairperson of the board of directors Conor Isdell says that the huge increase in assets in recent years has forced the credit union to introduce a maximum savings limit.
“Our total assets have grown strongly again this year, increasing by €33.3m. Over the last three years, our assets have increased by €122.5m necessitating a requirement of €12.25m to be transferred to the Regulatory Reserve. In the current year, the board approved the transfer of a further €3m to the Regulatory Reserve to meet requirements. Given that the Regulatory Reserve requirement is well in excess of the surplus generated for the year, the board has taken a decision not to declare a dividend or loan interest rebate for the current year.
“During the year, we imposed a maximum savings limit of €100,000 per member in order to go some way in limiting the build-up of savings. While the imposition of this limit is regretted, it is set at a much higher level than that available in most other Irish credit unions. With the withdrawal of Ulster Bank and KBC from the Irish banking sector, we are seeing further strong savings growth over the last number of months and we expect this will continue in the short to medium term. This rate of savings growth is not sustainable in the long term. We would not wish to have to lower the savings limit in the coming year, but we may have no alternative...”
Speaking to the Westmeath Examiner, manager Tom Allen said that overall the NMCU has had a “very strong year”. In addition to its successful rebranding, Lanesboro Credit Union became the latest credit union in the region to merge with the NMCU.
Mr Allen also noted that one of the few positives to come from the recent rises in interest rates is that income generated from NMCU investments should also go up. He says that he is confident that NMCU’s surpluses will increase in the coming years and it will soon be able to pay dividends out to members once again.
Other highlights from the report
Total income increased by almost €600,000 to €9.7m.
Loans to members increased by almost €9m during the year to a record high of €94.7m at 30th September 2022.
The credit union’s reserves were €55.6m on 30th September 2022.