BARCELONA, Spain — The economic crisis in the U.S. is hitting CU balance sheets around the world in different ways, with countries that thought they would escape its effects saying they have also recently begun feeling some pain.
Yet with the contrast to the focus on financials typically seen at credit union meetings in the U.S., the worldwide recession seemed only to amplify the optimism always on display during meetings hosted by the World Council of Credit Unions, including its World Credit Union Conference in this Mediterranean city last week.
"Our return on investment is never fully measured in dollars earned, but in members served and, in many cases, lives saved as a result of those efforts," said the association's CEO, Pete Crear. Melvin Edwards, the outgoing chair who was replaced by Barry Jolette, CEO of San Mateo CU in California, added, "As the economy improves and the clouds lift, we will be well positioned."
The meeting included several firsts, including attendance by the first representative from Afghanistan's fledgling CU movement, and the first meeting of the WOCCU-backed Global Women's Leadership Network, which attracted approximately 75 women and raised nearly $100,000.
But in addition to the global support for credit union business model, the other common theme throughout the event that attracted more than 1,000 people from approximately 60 countries was the worldwide recession. A board member of a credit union in Australia, where the downturn has been less severe than in the U.S., said the primary effect is seen in rates being charged (around 5% for a mortgage) and paid (perhaps .05% on most deposits), down from 8% and 5%, respectively, a few years ago. An CU in Ireland called the issues it's facing "pretty bloody significant."
Carilus Ademba, managing director of the Kenyan Union of Savings & Credit Union Cooperatives, that country's trade association, said the recession has being felt now by Kenyans in tourism-related businesses and by growers of coffee beans and tea, along with other industries. As a result, borrowing has declined and growth has slowed, Ademba told Credit Union Journal.
In less developed countries the fallout is often primarily affected by regulation and oversight. WOCCU EVP/COO Brian Branch noted that during a workshop among African CUs held prior to the launch of the World CU Conference the economy's effects were a "matter of degree," for instance.
On the plus side, Branch said many credit unions around the world are seeing a surge in membership and deposits, the latter often small savings accounts. "They are also seeing big increases in loan portfolios, but again that's many smaller loans," Branch said. "Members of credit unions in many countries outside the U.S. are micro-entrepreneurs, so they need small loans."
The negative trend, acknowledged Branch, has been that the credit growth of recent years took many CUs by "surprise," a situation compounded by the fact many countries lack any sort of credit bureaus and the credit unions have inadequate risk analysis tools.
"You can have two countries that speak the same language and have similar cultures and might be right next door, but in one credit unions did not have much discipline and did not stay on top of provisions and they do not have much capital to fall back on, and in the other they have really grown and built a capital cushion," said Branch.
As a result, much of the World CU Conference's agenda was focused on credit risk tools and other related analysis, Branch said. The meeting was the largest gathering of CUs on the European continent, with 62 countries on hand. The U.S. delegation remained the largest, but its number was noticeably smaller than other recent meetings.
