April 3, 2009

OTTAWA -- Despite the current market turmoil, the credit union system has not restricted its business lending, David Phillips, president and CEO of Credit Union Central of Canada told the House of Commons Standing Committee on Finance in a presentation on April 2.

While some lenders have pulled back from credit granting, credit unions “have pursued our more traditional, relationship-based approach to lending and credit unions continue to meet their members' needs,” Phillips said.

Phillips was joined by Ralph Luimes, Chief Executive Officer of HALD-NOR Credit Union, located in South-Western Ontario.  Luimes is also the Chairman of the Steering Committee responsible for the Canadian Business Owner Strategy, the credit union system’s initiative aimed at the small to medium size business market,. 

The committee is examining credit availability and the stability of the Canadian financial system.

Phillips said credit unions are very much aware of the economic difficulties currently facing Canadians and are working closely with their members and their communities to temper the impact of the crisis.

Some reports have claimed that the availability of credit to businesses and consumers has  declined in recent months, Phillips said.

“As a general observation this is true, in that non-traditional lenders have retreated as financial market liquidity has grown tighter and the market for securitization has shrunk. However, the credit union system has not participated in this pull-back from credit-granting.”

In 2008 credit union loans grew by 7.2%. In the last quarter of 2008 system loans increased by 1.6% which, at an annualized rate, amounts to growth of 6.5%. Loans as a percentage of total deposits were 93.7% at the end of 2008, down slightly from the 95.8% 12 months before, a reflection of a strong growth in deposits. 

Credit unions are committed to the small and medium sized business market. Industry Canada statistics illustrate this well. A comparison of Industry Canada SME lending data looking at the chartered banks, foreign banks, and credit unions reveals that, nationally, credit unions account for 18% of the SME lending market for authorizations $500,000 and under. In PEI and Manitoba this figure is 50%, in Saskatchewan it equals 62%, in Alberta 20% and in British Columbia 28%.
 

“This market is a key to credit union growth and our system will not pull back from our SME members.  Our commitment to this important market is further demonstrated by the system’s Canadian Business Owner Strategy, more commonly known as CBOS.  Created in 2005 to enhance the competencies and capacity of credit unions to serve the business owner market as well as to raise awareness about credit unions with business owners, CBOS has actively engaged over 300 credit unions since the start of the program,” said Phillips.  

Phillips also told the committee that that the credit union system remains strong.  Despite the economic downturn that began in the last quarter of 2008, the Canadian credit union system ended 2008 on solid financial ground.  System assets, savings/deposits and loans all recorded gains, maintaining the annual growth reported in previous quarters.