BUSINESS MONDAY: BET Co-operative Credit Union official optimistic despite challenges

AN official of the BET Co-operative Credit Union Limited is very optimistic of the future of the organisation despite some challenges brought on by the local environment.

Rolric A. Branch of the Board of Directors gave his thoughts at the recently held annual general meeting of the credit union. He said that despite a reported deficit, the credit union has not shown an operational loss.

"We are in a strong position fiscally with very high liquidity, loyal membership and a strong asset base," Branch said. 

"As a result, we are well poised to capitalise on any opportunities created and take our Credit Union back on a path of sustainable growth in the medium to long term," he continued.

The official acknowledged that the past financial year was again challenging for the credit union.

While the Barbados Economic Recovery and Transformation (BERT) programme has brought some stability back to the economy and signs of a rebound, enough time has not elapsed for the average consumer to feel confident in investing in a home or a vehicle.

"Instead, we continue to see our loan portfolio dominated by refinanced loans and debt consolidation," Branch declared. 

"The market itself continues to be extremely competitive for a small pool of borrowers," he stated, while noting that these circumstances contributed significantly to the decline in income from loans by $48 421.

"Needless to say, the COVID-19 pandemic has had some financial impact towards the end of the financial year and we expect this to continue throughout the 2020/2021 financial year."

It was also explained by the credit union member that to supplement loan revenue, they invested heavily in various low-risk options with modest yields. Unfortunately, he went on, the credit union is governed as to the number of liquid assets it may invest at any one time and the investment opportunities which produce significant returns continue to decline.

"In addition, due to the increased risk placed on government paper we hold, we have had to mark down their value on our books by $322 000," he pointed out.

Other challenges encountered were the costs to satisfy regulatory requirements, which also had an impact on the surplus of the BET Co-operative Credit Union, as well as various accounting practices.

So while the financial institution would have normally reported a surplus for this financial period, provisions for bad debt, impairment of long outstanding VAT returns or accounts receivables, and other provisions have negatively affected our income statement, the official added.