Deborahh Lambourne, chair, Illawarra Credit Union
Closing branches can save a credit union costs – but may also cost it members.
Illawarra Credit Union appears to be juggling this dichotomy after shutting its branches at Corrimal, Dapto and Helensburgh in June 2022.
The credit union said it attracted 947 new members over the year to June 2023. But the annual report shows the value of withdrawable shares fell A$2000 to $42,000, implying an overall loss of members.
Closing its distribution network may also be a factor in another reversal. The credit union’s receivables fell eight per cent to $798 million.
Deposits also fell eight per cent to $828 million.
Rising interest rates, savings on premises and, presumably, the benefit from restraint on payroll enabled a 50 per cent rise in net profit over the year to $3.1 million.
In an unusual funding deal, Illawarra has a Receivables and Acquisition Servicing Agreement with Bendigo and Adelaide Bank whereby the credit union is able to assign the rights and benefits of loan receivables to the bank to a maximum of $50 million.
In March 2023, the credit union executed a $17.8 million assignment of its loans to Bendigo.
As Illawarra services the loans and retains “a significant portion of operational risk” it continues to recognise the loans on its balance sheet.