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Rating agency warns about Credit Union North

Wednesday 19th of September 2012

The ratings agency has placed Credit Union North's ‘BB’ long-term issuer credit rating on CreditWatch with negative implications.

“The CreditWatch placement on CUN’s ‘BB’ rating reflects heightened concern around the stability and future direction of the credit union’s business position,” S&P credit analyst Andrew Mayes says.

“Specifically, CUN’s lending volumes--most notably its personal lending--continue to contract, and we believe the credit union is not well-placed to quickly resurrect a positive growth scenario, owing to its relatively weaker operating efficiency; this has, in part, contributed to the credit union’s higher reliance on fee income compared to its peers, thus limiting its ability to better-compete.  Progression of business initiatives has also being slowed by board and management changes over the past year. ”

In Standard & Poor’s opinion, CUN’s lending base remains under pressure amid broader operating environment challenges and a diluted member proposition.  "Although we note the decline in aggregate lending volumes has slowed in fiscal 2012, with the credit union experiencing a further increase in mortgage lending to record levels, its higher-returning personal lending portfolio--considered by the credit union as integral to its relevance with its member base--continues to contract at an unhealthy pace (down a further 22% in 2012, from 34% in 2011)."

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