Vancouver City Savings Credit Union (Vancity) saw itself in the red for the first time in many years in 2023.
Vancity revealed in its year-end financial results in March that the credit union had a $1.3 million net loss in 2023, following one of the strongest financial years in 2021 and a year with moderate growth in 2022.
The credit union attributed the profitability loss to an “unprecedented economic period” characterized by a prolonged inverted yield curve, which resulted in “significant compression” of Vancity’s margins, according to the report.
The report also noted that the rapid rise of interest rates, combined with changing member behaviour and stock market weakness, negatively impacted its profitability in 2023.
Vancity, which allocates 30 per cent of its net profits to members and communities, said there will be no member share dividends in 2024 given the net financial loss, but it will continue to support communities using money set aside in previous years.
“Although the financial sector is facing a challenging economic cycle, we have strong fundamentals and a sound business strategy to weather this and emerge in a very strong position,” said Wellington Holbrook, president and CEO of Vancity.
“Work is underway to diversify our revenue, operate more efficiently, and identify new revenue sources which will lead to improving profitability in future years.”
The credit union said it will also focus on attracting a greater share of everyday banking deposits to address future profitability.
In 2023, Vancity had more than 7,000 new members, saw growth in overall net lending and Visa lines of business and added $538 million to its total assets, according to the report.
The credit union’s balance sheet assets grew to $28.8 billion, a two percent increase from the previous year, and total assets plus assets under administration grew to $35.5 billion last year.
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