Credit Unions lending increases 21.4%

The Bank of England’s annual update on the Credit Union sector shows that loans to members increased by 21.4% to £2.3 billion, the largest year-on-year change, after increasing 15.7% in 2022.

The total number of Credit Union members also rose by 4.6% to 2.2 million while income grew by 27.5% to record levels in 2023, reaching £324.3 million.

Income increased by 27.5% to record levels in 2023, reaching £324.3 million, while corporation tax paid by UK Credit Unions rose by 216.7% to £9.9 million.

Total expenditure grew by 28.3% to £250.9 million, as bad debt provisions and write-offs increased by 56.6% to £58.7 million.

Lauren Peel, Director of Consumer Insights at Fair4All Finance said “Growth in credit union activity is likely to gather pace as more people are drawn towards community-focused financial services. Credit unions are an essential pillar of many local communities at a time when financial vulnerability is on the rise across the UK, and when there are fewer branches available for those who need it”.

“We know from our research that 20.3 million adults are now living in financially vulnerable circumstances, and more than one in ten (11%) have increased their reliance on illegal borrowing or loan sharks in the last year. These high-risk options have no place in an inclusive financial system and credit unions play a vital role in helping people to build financial resilience.

“Credit unions are community focused, and often offer a more personalised service to their members. Credit unions also play a pivotal role in complementing banks and building societies by ensuring the sector as a whole can better respond to the needs of all consumers so that no-one is locked out or overlooked.

“The Government’s pledge to double the size of the UK’s co-operative and mutual financial services sector is a clear endorsement of credit unions’ potential to change lives for the better and provide responsible financial services to reflect the needs of our society.”

Tom Cuppello, Director Risk at Broadstone, said “Credit Unions play a vital role in our financial ecosystem offering a range of borrowing products to members, who may be locked out of the mainstream lending sector.

“The surge in loans to members suggests an increased appetite for borrowing that is being driven the rising cost of living but also that Credit Unions are stepping in to fill some of the gap left behind following the death of doorstep lenders.

“Given the focus on member wellbeing, support and financial inclusion this is a social and financial services positive. It also points to the growing sophistication of borrowers to shop around to find the most suitable products for their needs.”