by Shawn Cumberbatch
The closure of Almond Beach Village and related changes involving its sister properties have had another negative financial spinoff.
An ongoing restructuring of the Super Centre and Dacosta Mannings business models are also expected to have negative fallout for BS&T Employees’ Cooperative Credit Union Limited.
That’s what management of the cooperative have reported to members, noting that while the organisation increased profits by $22,000 up to the end of March this year, loans decreased by $1 million (3.5 per cent), something blamed on the closure of the Almond hotel and other redundancies involving members in the Barbados Shipping & Trading conglomerate.
Officials said the decline in loans was “a rare occurrence”, and attributed it partly to a “noticeable reduction” in mortgages last year.
“The credit union has successfully manoeuvred through yet another year of very difficult economic times. Among the major challenges was the closure of the Almond Resorts Hotels, which employed several of our members,” President Anthony Branker said.
“Furthermore, receiving news about members’ job losses or reduced incomes in their households became the norm throughout the year. Such situations worsened an already difficult lending environment and influenced the outcome of the loan portfolio diminishing by approximately $1 million.”
More challenges were also expected this year in light of the Super Centre and Dacosta Mannings changes.
“We should expect that 2013-14 will be another challenging one. Thus far, we have witnessed the merger of Super Centre and Dacosta Mannings Retail Limited, which resulted in the redundancy of some of our members,” Treasurer Shane Sandiford said in his financial review.
“This is likely to further dampen the demand for loans. Despite the difficult economic conditions however, the credit union should maintain its current prudent policies, as these have kept us on the path of financial soundness, which we expect to continue in the coming year,” he added. Branker also said that “despite the challenges the credit union was able to increase members’ savings; match or exceed market returns on all such savings when compared to other financial institutions; achieve growth of net income; and build reserves”.
“Total assets grew by $3.7 million. The major source of this growth was members’ savings, which increased by $3.4 million. This was achieved despite several members opting to withdraw funds instead of borrowing,” he noted.
“As the credit union’s liquidity increased, we resorted to increasing our investments in Government Treasury Notes and Debentures. This action was taken in the earlier part of the financial year and was aimed at maintaining an acceptable spread between investment yields and interest expense.” The president also pointed out that the falloff in loans was the main reason for the $143,000 reduction in loan interest income.
“The impact of this reduction was mitigated by an increase in investment income by $216,000. Net interest income fell by $3,000 however, as interest expense on members’ savings increased by $73,000. Stringent control of expenses, coupled with small investment gains contributed to an increase in net income,” he said.