Page 28 - ECU_Annual_Report_2018

EASTERN CREDIT UNION Annual Report 2018

4. Financial Performance
A review the financial performance for the year 2018 suggests that the society displayed some resilience to the
challenges faced as its surplus grew from $54.2 million in 2017 to $56.7 million in 2018, representing an increase
of 4.3 percent. This was achieved despite the 7.7 percent reduction in interest income from $166.4 million in 2017
to $154.5 million in 2018 and the 6.24 percent decline in overall income from $196.6 million to $185.0 million over
the same period. The value of the loan portfolio continued the downward trend that began in 2016, declining
by 3.54 percent from $1.364.5 billion at the end of 2017 to $1.317.5 billion in 2018, consistent with the trends
observed in the wider financial sector. However, a more favourable picture emerged with share and deposit
growth with balances amounting to $1.442 billion and $456.3 million respectively at the end of 2018 compared
to $1.416 billion and $423.0 million in the previous year. Overall, the asset base of the Society strengthened by 3.8
percent in 2018 as it grew from $2.134 billion in 2017 to $2.218 billion in 2018. Members’ equity also increased,
bolstered by an enhanced reserve fund that rose from $103.6 million in 2017 to $109.3 million in 2018.

It must be pointed out that the figures for the year 2016 and 2017 that were submitted in the financial statements
presented to the membership during the Annual General Meeting held in 2018 have been restated to reflect a
reduction in the loan loss provision due to a revaluation of the collateral held against the loans in these years.
The auditors uncertainty about the accuracy of the loan loss provisions previously estimated had resulted in a
qualified audit opinion being given in the years 2016 and 2017. The auditors are now satisfied with the provision
values as presented in these financial statements. The impact of the restatement is explained in greater detail in
the Notes to the Financial Statements.

Based on its performance in 2018 and taking into consideration the need to strengthen our reserves and improve
our institutional capital, your Board of Directors agreed to recommend a dividend of 2.25 percent on their
Redeemable Shares, a dividend of 5 percent on Special Shares and a patronage refund of 7.5 percent for the
financial year ended 31st December 2018. This decision means that our members will benefit almost immediately
from a total dividend payout of $ 33.1 million and a patronage refund of $11.6 million will be distributed to our
borrowing members, effectively reducing their cost of borrowing. These are benefits that only the members of
cooperative financial institutions or credit unions can enjoy.

Summary of Highlights 2016-2018

2016 2017 2018
Dividend on Special Shares 5.0% 7.0% 5.0%

Patronage Refund 5.0% 7.0% 7.5%
Dividend on Redeemable Shares 2.0% 2.5% 2.25%
Surplus $91.9m $54.2 1 $56.7m
Institutional Capital 9.2% 9.7% 9.8%

1 The surplus for the year 2017 is restated in the 2018 Financial Statements.

26 NAVIGATING THE FUTURE TOGETHER