11
BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED
ANNUAL REPORT 2013
Economic review:
During the year under review the Barbados economy recorded
little or no growth due largely to the continuing effects of
the global recession and greater uncertainty in the business
environment. According to recent economic reports, real
output in tourism, manufacturing, construction and agriculture
declined by an average of 3 percent. Output in the non-traded
sectors grew by only 1percent, subdued by the lack of growth
in the tourism sector and reduced spending. Although the rate
of inflation declined, the rate of unemployment increased to
12percent during the year.
Despite these challenges the Barbados economy remained
relatively stable and this resilience was marked by considerable
excess liquidity in the financial sector. Across the financial
sector, financial institutions maintained capital positions well
above the minimum statutory requirements and recorded
improved performances in their operations.
However, the economic slowdown and increasing rate of
unemployment have impacted negatively on credit quality.
As a result there has been a rise in non-performing loans and
increasing rates of loan delinquencies across the financial
sector.
Economic prospects for 2013 and beyond
Continuing instability and uncertainty in the international
environment is expected to impact negatively on prospects for
growth over the next twelve months. Real economic growth
for 2013 is expected to be less than 1percent. Prospects for
improvement will depend largely on raising competitiveness
and lowering inflation through reduction in spending and
wage restraint. Government will need to maintain that delicate
balance between driving productivity and economic recovery
while maintaining a good strong fiscal position.
Consolidated Financial Statement Highlights
MANAGEMENT DISCUSSION AND ANALYSIS
This section of the Group’s Annual Report provides a discussion
and analysis of the financial condition and performance of
the consolidated operations of the Barbados Public Workers’
Co-operative Credit Union Limited and its subsidiaries (“the
Group”) for the financial year ended March 31, 2013.
The Group includes the parent, Barbados Public Workers’ Co-
operative Credit Union Limited (“BPWCCUL”), its subsidiary
BPW Financial Holdings Inc. and its subsidiary CAPITA Financial
Services Inc. (“CAPITA”).
Overview:
In the face of persistent weak economic conditions and an
increasingly competitive environment, the Group maintained
steady growth in loans and deposits and strengthened its
capital and reserve positions through increased earnings results
for the year ended, March 31, 2013. The Group’s performance
was led by BPWCCUL which increased its net surplus by 21.5
percent, but also benefitted from the improved performance
of CAPITA whose net income doubled when compared with
the prior year. These strong results were achieved amidst
a challenging environment characterized by increasing
unemployment, deterioration in credit quality and declining
interest margins. However, the Group has been able to sustain
its growth and profitability levels by closely monitoring credit
risk, effective management of interest rate risks and adopting
a prudent approach to loan loss provisioning. The Group’s
performance has also been helped by the fact that mortgages
represent almost 40 percent of its total loan portfolio, thereby
lowering the risk-weighting of the Group’s asset portfolio.
Notwithstanding these positive developments in the Group,
there are concerns that a protracted slowdown in the
economy together with external factors such as the new
FATCA legislation by USA authorities could have a significant
negative impact on the local financial sector. As a consequence,
there is a renewed emphasis by regulatory and supervisory
bodies to ensure that the financial sector has the capacity to
withstand sizeable shocks and remain resilient to difficulties
in the economic environment. Results of recent stress tests
conducted by regulators confirmed that the financial system
is well capitalized; however, various policy initiatives are being
undertaken by regulators to ensure the continuing stability of
the local financial sector.
Despite the challenges on the horizon, the Group will continue
to ensure that risk exposures are closely monitored and that
the business model across its operations remains viable and
relevant to members and clients through innovative products
and services.
0
200,000
400,000
600,000
800,000
1,000,000
2009
2010
2011
2012
2013
599,364 671,756
842,307 906,186 951,509
In BD$'000
Total assets
13,214
Net Income
