Credit union caps savings at €25,000 due to rising bank fees

One of the State’s biggest credit unions has put a limit of €25,000 on the level of savings new members can hold, due to the costs it is incurring by having money on deposit with banks.

"Credit unions have to put on reserve a percentage of savings so the more savings we have, the more we have to keep on reserve so less investment income," chairman Paul Cooney noted in South Dublin Credit Union's 2020 annual report.

“Again, investment income has decreased and now banks have started charging the credit union for monies sitting in current accounts. To survive we need to lend more so any members thinking about borrowing throughout the year, your first stop should be your credit union,” he said.

Long-standing members with more than €25,000 with the credit union are not allowed to increase their level of savings, and if they go below the threshold they will not be able to go above the figure at a later date.

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South Dublin’s bank charges rose to €69,332 in the year to the end of September 2020, up from €48,352 in 2019, and just more than double the level of 2018.

South Dublin’s loan book grew by just 0.8 per cent last year, a period that was impacted by the Covid-19 pandemic. Mr Cooney described this as a “good performance” amid “nervousness in borrowing” due to the pandemic.

Bad debts

Some 852 loan applications were approved, with a value of €6.6 million. This brought total lending to members to €12.2 million at the end of last September, equating to 1,657 loans.

South Dublin's investments amounted to €39.6 million at the financial year end, up from €29.6 million in 2019. This included investments with Société Générale of France, Deutsche Bank, Credit Suisse, Spain's Caixabank, and Barclays and Lloyds in the UK.

Income declined by 1 per cent to €872,180, while its surplus reduced by 86 per cent to €64,121 largely as a result of a €193,262 provision for bad debts.

The credit union wrote off loans to the value of €45,312 but recovered bad debts worth €122,744 . Its total provisions for bad debt stood at €914,277 at the financial year end, which the board described as “extremely prudent”. Reserves amounted to €9.4 million, which represented some 14.2 per cent of its assets.

South Dublin Credit Union has branches in Stillorgan and Donnybrook, and had 12,070 members at the end of September last.