A new quarterly outlook by the Financial Services Regulatory Authority of Ontario (FSRA) says Ontario credit unions experienced year-over-year growth in Q2 of 2023, but the sector’s profitability has slowed and loan delinquency continues to increase.
This year, the FSRA’s observations included 58 institutions in the sector, two less than in Q1 of this year and Q2 of 2022.
Key findings in the report, entitled Sector Outlook Report 2Q-2023: Ontario Credit Unions and Caisses Populaires, show that the sector did experience profitability in Q2 of this year.
The improvement, says the report, was recorded at 20 basis points (bps), which is up two basis points (bps) compared to Q1, but down 45 bps from 2022.
At the end of Q2, sector assets totaled $93-billion, reflecting a year-over-year increase of $5.6-billion (up by 6.4 per cent).
But a major issue for the sector was delinquency.
“Delinquency (over 30 days) on residential mortgages continues to increase, up 15 bps from last year,” says the report. “Commercial loans are seeing a decreasing trend in delinquencies, down 20 bps from last quarter and 10 bps year-over-year.”
However, total loan delinquency was 41 bps, up eight bps year-over-year but down three bps quarter-over-quarter, write the experts.
The credit quality of mortgage portfolios also continued to decline as housing markets and mortgage affordability was challenged, says the report.
Even though liquidity in Q2 remained strong at 11 per cent, it was down by 70 bps year-over-year, says the regulator.