Irish credit unions show positive trends but face lending challenges
The Central Bank of Ireland's latest report highlights continued positive trends in credit union sector data for the year ended 30 September 2025, with strong reserves and liquidity. However, challenges persist, including low loan-to-asset ratios and global macro-environmental risks, alongside new regulatory changes expanding lending scope.
Resilience and expanding lending horizons
The Central Bank of Ireland's 'Financial Conditions of Credit Unions, 2025' report reveals continued positive trends for the sector, with total assets increasing by 5 percent to €22.5 billion for the year ended 30 September 2025.
Gross loans outstanding rose by 8 percent to €7.7 billion, while member savings grew by 5 percent to €18.7 billion.
The sector demonstrated strong resilience, maintaining robust reserves, which increased by 5 percent to €3.66 billion, and an average liquidity ratio of 37.8 percent, up 2.4 percent.
Notably, the Central Bank introduced significant changes to the regulatory lending framework, effective from 30 September 2025, providing credit unions with increased scope for house and business lending to members.
This move is expected to be adopted in a phased, prudent, and sustainable manner, requiring continued development of skills and risk management.
Consolidation and persistent lending challenges
The sector continues to consolidate, with 172 credit unions active in September 2025, down from 228 in September 2020.
Larger credit unions (≥€100M assets) now represent 76 percent of total sector assets.
A persistent challenge is the low loan-to-asset ratio, which, despite a slight increase to 33.9 percent, remains a key area for development.
The global macro-environment introduces high uncertainty and potential risks to credit quality and investment valuations.
However, arrears exceeding nine weeks remain low at 2.2 percent, and the average cost-to-income ratio improved to 71 percent, reflecting increased interest income.
Maintaining strong reserves and liquidity, alongside strengthening operational resilience, is emphasized for boards and management.
Growth potential meets risk vigilance
The report paints a picture of a resilient sector poised for growth, particularly with expanded lending powers.
However, the emphasis on prudent implementation and enhanced risk management underscores the inherent challenges of this expansion.
For credit unions, this means a strategic imperative to balance growth ambitions with robust governance and operational resilience.