Slowest loan growth in nearly a decade
LAS VEGAS (6/6/07)--Credit unions are expecting the slowest loan gain since 1998, according to the Credit Union National Association's (CUNA) Bill Hampel, senior vice president of research and policy analysis/chief economist, and Mike Schenk, vice president, economics and statistics.
They spoke at the CUNA-sponsored America's Credit Union Conference & Expo, which is meeting through Wednesday in Las Vegas.
This is due to a slowing economy, soft housing market, and more cautious consumers.
The CUNA economists forecasted what credit unions can expect through the rest of 2007 and into 2008, during Tuesday's Thought Leader Session, "An Economic Outlook: The Challenges and Opportunities for Credit Unions."
The national savings rate (personal savings to disposable personal income) will return to positive territory this year after being negative for the past two years, they said.
Other credit union movement predictions:
- Credit quality will deteriorate marginally. Slower loan growth, loan seasoning, and a slower economy should increase both delinquency and net loan charge-off ratios.
- Return on assets (ROA) will decline. Deteriorating credit quality and a continued flat yield curve will lower credit unions' ROA, perhaps below 0.7%, during 2007. Without significant increases in noninterest income or additional interest-rate risk, the flat yield curve will reduce net interest margins and net income.
- Capital-to-assets ratios will remain high. Capital contributions may fail to keep pace with asset growth in 2007, but 2008 net income growth will outpace asset growth and increase net worth ratios.
First-quarter 2007 financial results from the National Credit Union Administration (NCUA) show U.S. credit unions remain financially healthy and continue to provide high levels of member service.
Hampel and Schenk also shared some first-quarter figures from the recently released Credit Union Profile.
For details from the report, use the resource link. For more information about ACUC&E, visit Credit Union Magazine's Daily News.
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