VANCOUVER, BRITISH COLUMBIA--(Marketwired - Feb 24, 2017) - Central 1 Credit Union (Central 1) announced its results today for the year ended December 31, 2016, with strong growth in assets and a profit of $57 million, up 8.8 per cent from $52.4 million in 2015.
"The credit union network enjoyed increased deposits from its members in 2016 and that was reflected in good performance by Central 1," said Don Wright, President and CEO of Central 1. "The growth in deposits and increased use of our digital banking products benefit our member credit unions, which in turn helps them advance investment in their communities."
The future of the Canadian credit union network's second tier was a focus for Central 1 during 2016. Central 1 consulted with member credit unions to explore the best options for the future of the network and ways to eliminate duplication and reduce costs.
In collaboration with Canadian Credit Union Association (CCUA) and Credit Union Central of Saskatchewan (SaskCentral), Central 1 has been reviewing the trade association functions that will best support our members through integration into CCUA. In December, Central 1, CCUA and SaskCentral announced the transition during 2017 of marketing and government relations functions to the national association, making progress towards the future state of the second tier.
"In November, the CEO Payments Strategy Committee made recommendations toward the national consolidation of the payments function," added Wright. "Central 1 believes that developing a national payments strategy is the right direction for the network, and we are working with credit unions and other centrals to achieve the right solution for our credit union network."
Financial highlights for 2016:
- Total assets were $17.3 billion, compared to $14.9 billion in 2015.
- Return on average equity was 5.6 per cent, compared to 5.5 per cent.
- Net financial income was $67.5 million, compared to $50.1 million.
The increase in assets was primarily attributable to higher deposits that were invested in securities in both the Mandatory Liquidity Pool and in Central 1's Wholesale Financial Services lines of business. The increase in assets was also partly attributable to increased external funding from new issuances of subordinated and medium-term debt in 2016, as well as increased funding through the Canada Mortgage Bond program.
Net financial income increased $17.4 million compared to the prior year driven primarily by higher income on assets through balance sheet growth. Net financial income growth has been driven by the increase in interest margin over the past two years, tapering off in the second half of 2016 due to the increase in external funding.
Central 1's Wholesale Financial Services and Trade Services business lines recorded higher profits than last year. Digital & Payment Services also made a strong contribution to the bottom line, following forecasted higher volumes in electronic payments that brought economies of scale enabling a price reduction for clients. To lead the market with creative solutions for credit unions, Central 1 continues to invest in development of innovative products and services and to partner with leading FinTech providers.
Examples of initiatives in the past year are:
- Products launched include online international money transfer and the fully integrated OpenAnywhere™.
- Central 1 created or expanded on strategic alliances with CGI and, more recently, Backbase to bring future FinTech solutions to credit unions.
- The IFRS Readiness for Credit Unions National Initiative selected Central 1 as the preferred vendor to provide an IFRS 9 impairment reporting solution.
- Central 1 invested in the FinTech industry with membership in BC Tech Association to support Western Canada's first FinTech program.
B.C. and Ontario credit union networks
Assets of the B.C. network totaled $71.9 billion at December 31, 2016, compared to $66.4 billion in the prior year. The B.C. network's net income was $260.9 million, an increase of $6.8 million over the prior year. Deposits were $62.5 billion up from $57.8 billion, while loans increased to $59.6 billion from $55.6 billion.
The B.C. network's regulatory risk-weighted capital ratio was 14.7 per cent at December 31 2016, compared to 14.9 per cent from the prior year
Assets of the Ontario network increased to $44.9 billion at December 31, 2016, compared to $39.9 billion in the prior year. The Ontario network's net income was $140.9 million, an increase of $28.6 million from the prior year, driven by an increase in financial margin and non-financial income.
The Ontario network's regulatory risk-weighted capital ratio was 13.0 per cent at December 31, 2016, a decrease of 0.8 per cent from the prior year.
About Central 1
With offices in Vancouver, Mississauga and Toronto, Central 1 holds on balance sheet approximately $17.3 billion in assets. We provide wholesale financial products, trust services, payment processing solutions and digital banking services to more than 300 credit unions and institutional clients from coast to coast.
In addition, Central 1 is the primary liquidity manager, payments provider and trade association for our 42 member credit unions in B.C. and 70 Ontario member credit unions. Our members represent a consumer-oriented, full-service retail financial system that collectively serves 3.3 million members and holds more than $116.8 billion in assets. For more information, visit www.central1.com.