HOT TOPICS:   Euro crisis   |   Mortgage rate cuts  |    Budget 2012

In this section

Offers for readers

The comment stream

Join the Interest community to be a registered commenter so you can:
- Edit your comments
- Avoid the CAPTCHA
- Vote on comments
Register Here

Already registered? log back in here ..

Forgotten your password? No problem! Click here

Finance sector jobs

Manager Operational Effectiveness and Assurance IT
Reporting to the Senior Manager Operational Risk Effectiveness and Assurance, the key focu...more
New Zealand
Financial Controller
Reporting to the Head of Finance - Retail and Business Bank the key focus of this role is ...more
New Zealand
Manager Finance Corporate Core - 12 Month Contract role
This role in consultation with the Financial Controller provides financial, strategic and ...more
New Zealand
IT Audit Manager - Internal Audit - Auckland
If you are motivated by the prospect of seeing the big picture, developing your team and m...more
New Zealand
efinancialcareers.com

Reader poll

Should you fix your mortgage now or stay floating?

Choices

First Credit Union gets BB credit rating

Posted in News September 10, 2009 - 07:54am, Alex Tarrant

Hamilton and Tauranga based First Credit Union has been assigned a BB long term credit rating by Standard and Poor's, which would make it eligible to continue to be covered by the government's retail deposit guarantee scheme when it is extended in October 2010.

The extended guarantee scheme bill was passed in Parliament under urgency yesterday and will see the guarantee's entry conditions tightened and it's fee structure switched around. Only firms with a BB credit rating or better will be eligible to join the extended scheme which will run from October 13, 2010, to December 31, 2011.

The fee structure for the extended scheme looks favourably on credit unions, putting them in the same category as banks, building societies and PSIS in having to pay lower fees than finance companies. (See chart below.)

First Credit Union is an amalgamation of Credit Union Hamilton, Credit Union Bay of Plenty and Credit Union Health.

Here is the Standard and Poor's release on First Credit Union:

Standard & Poor's Ratings Services said today its 'BB' long-term counterparty credit rating on New Zealand-based First Credit Union (FCU) reflects the credit union's good franchise and supportive member base. At the same time, Standard & Poor's also assigned its 'B' short-term counterparty credit rating. The outlook is stable.

"FCU has a good business position in the Hamilton and Tauranga regions of New Zealand," said Standard & Poor's credit analyst, Peter Sikora. "This is underpinned by its ability to generate good interest margins to contend with a recent increase in delinquent loans, and to contend with recent liquidity- and funding-based credit-market pressures."

These strengths are moderated by FCU's exposure to lower socioeconomic customers in its personal-loan portfolio and its property-development mortgage exposures.

"But we expect that FCU's business and financial profiles will remain sound during New Zealand's current economic downturn, and through regulatory changes affecting the credit union sector," said Mr. Sikora. "Importantly, the stable outlook factors in our expectation that FCU will soon reduce its property-development-type lending exposures, and that its financial profile will improve in the current fiscal year as a result of increased earnings stemming from interest-margin improvement and lower loan provisioning."

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment in the box on the right or click on the "'Register" link at the bottom of the comments. Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making these comments.

by Alex Tarrant | 10 Sep 09, 1:37pm

Here is a piece from

Here is a piece from the Business Spectator in Australia on how credit unions across the Tasman have been doing.

http://www.businessspectator.com.au/bs.nsf/Article/Filling-the-banking-v...

Earlier this week Victoria's largest credit union, Mecu, reported a 4.4 per cent increase in earnings on a 22 per cent increase in assets funded by a 24 per cent increase in deposits. That doesn't look too bad a year when one considers what the major banks have been reporting.

The performance of the credit union, in the process of merging with RegionalOne Credit Union, reflects one of the barely told success stories of the global financial crisis. While the regional banks have all but disappeared, either absorbed into the majors or destabilised and rendered uncompetitive by the closure of securitisation markets and their limited and expensive access to wholesale funding, building societies and credit unions have fared quite well in the circumstances.

As sectors, their profits have fallen but their assets and deposits have grown and, within those sectors, the larger institutions, like Mecu or the sector leader, Credit Union Australia, have performed well.