Credit Committee report

Chair, Credit Committee

The main purpose of the Credit Union is to help Members achieve financial independence through the build-up of savings.

Our loan service acts in harmony with this purpose, by providing a means by which Members can satisfy their day-to-day financial needs without dipping into those hard-earned savings. Whilst the Credit Union does earn a small amount of interest from banks through the placement of surplus funds in a range of deposit accounts, the income from lending is its only significant source of revenue and the proper functioning of its lending service is therefore of vital importance to the continued viability of the Credit Union. The Credit Committee is responsible for exercising oversight of this loan service on behalf of the Board. The current committee has a membership of three – two volunteers and one member of staff.

 

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2020/21 is the first full year of operation in which the Covid pandemic affected Credit Union operations. It has proved to be a very difficult year with loans issued dropping significantly for the second year in a row, to 2,486 (288 less than last year and nearly 600 down from the most recent ‘non-covid’ year). Thankfully, money volume did remain stable and finished the year at £3.63m. Nevertheless, it remains the case that this volume has dropped by 16% since the start of the pandemic – a figure in excess of 1¼ million pounds. It will likely take many years for our loan volumes and thereby our income to return to pre-pandemic levels.

Whilst there can never be complete certainty in a lender’s mind as to whether or not the loan they are about to approve will be repaid, the Credit Union can support and help those decision makers by providing quality training married to effective policies and procedures. Whilst many Members will not be aware of this, Ormeau Credit Union has an excellent reputation within the movement for the high quality of its lending processes and procedures. Indeed, its lending policy was taken and used by its affiliation body the Irish League of Credit Unions to be set out as the standard, so-called ‘capacity-based lending model’ for the entire island of Ireland – something for which we are immensely proud.

This success also reflects the hard work and commitment of our lenders, just as much as the quality of the processes and procedures underpinning their work. Unsecured lending of the type that the Credit Union undertakes can never just be an exercise in box ticking. Neither is the type of ‘credit score’ based lending (which is so prevalent in mainstream lenders) appropriate for our business model. Credit Union lending is a complex and often intuitive process that can have a significant effect on Members’ lives and all our lenders know and understand the importance of the decisions that they make, both for the Credit Union and the Member. In our view such decisions can only be effective if they are made by individuals with the empathy, knowledge and years of experience that we are fortunate enough to have available to us at Ormeau.

Covid 19 has very dramatically affected our business. There appears to be some levelling off of the contraction in our lending volumes at time of writing, but that is likely to be undermined by our traditional post-Christmas ‘quiet time’. Loan demand from Members drives our income and keeps the doors of the Credit Union open. It’s as simple as that. I would therefore ask you to consider that as we move into 2022 and put Ormeau Credit Union at the top of your list of financial services providers. If you need a loan for any purpose, we will be happy to help you.

Address

252-256 Ormeau Road
Belfast BT7 2FZ

Call Us

028 9064 3951

Email Us

info@ormeaucreditunion.com