The exterior of the Community & Workers of Jamaica Credit Union Limited's headquarters oin St Andrew, Jamaica (Photo: Foursquare

J’can credit unions growing more slowly than banks, but mortgages climb — BOJ

The exterior of the Community & Workers of Jamaica Credit Union Limited's headquarters oin St Andrew, Jamaica (Photo: Foursquare

Jamaican credit unions, despite accounting for less than one-tenth of the size of the deposit-taking sector based on assets under management, have been increasing their stake in the mortgage market and growing the asset class.

The community-based financial institutions, which fall under the supervision of the Bank of Jamaica (BOJ), now total 24.

The Bank of Jamaica building in downtown Kingston. (File photo)

In the six months beginning August 31, 2020, when assets totalled JM$133.5 billion, asset growth for credit unions reached 3.5 per cent, according to BOJ published data. At the end of January 2021, total assets held by the credit unions equalled JM$138.2 billion.

At present, the BOJ is waiting on legislative changes to pull credit unions into its prudential reporting framework, but data collated and published, so far,  does offer a glimpse of the inner workings of the sector.

Asset growth in the credit union sector compares to an increase of 12.4 per cent among the eleven DTIs included in the BOJ’s prudential report published in May and reflecting growth to March 31, 2021 for commercial banks, the merchant bank and two building societies.

Signage at Scotiabank Jamaica’s headquarters in downtown Kingston, Jamaica.

With regard to these institutions, assets increased to JM$2.1 trillion at March 2021, up from $1.8 trillion at March 3,  2020.

Assets recorded include loans and advances (net of provisions), cash places, investments, securities purchased with a view to resale, accounts receivable, fixed assets and other assets.

Loans and advances remain the largest asset class for the credit union sector. This segment was almost flat within the six months published by the BOJ.

NCB credit cards (File photo)

Mortgage growth

As of August 31, 2020, loans within the credit union sector were JM$89.77 billion. Six months later, as of January 31, 2021, loans were just 1.9 per cent more, totalling JM$91.5 billion.

At the same time, Bank of Jamaica data shows that consumer loans for credit unions flattened over the six-month period, staying close to JM$83.6 billion in August 2020.

Mortgages, credit unions’ second-largest loan category, grew from JM$9.36 billion as at August 31, 2020, to JM$10.6 billion as at January 31, 2021.

The sector has reduced accounts receivable fromJM$2 billion in August 2020 to $1.7 billion at month end January 2021.

Liabilities for the credit union sector at January 31, 2021, totalled JM$238.84 million, a slight uptick from JM$236.21 million at month end August 2020 or six months before, according to the BOJ’s data.