Membership and lending growth, driven by auto loans, continue to power strong credit union results, according to the July’s Monthly Credit Union Estimates.
“A combination of a strong economy, low interest rates and great service by credit unions has led to continued fast membership and loan growth,” said Jordan van Rijn, CUNA senior economist. “Memberships are increasing at the fastest pace since the 1980s, and loan growth is being driven by tremendous increases in auto loans, which saw the fastest monthly growth since the 1990s.”
Credit union loans outstanding grew 1.1% in July, following a 1% increase in June. Other mortgage loans led loan growth during the month, rising 2.4%, followed by home equity loans (2%), new auto loans (1.6%), unsecured personal loans, credit card loans and used auto loans (all rising 1.3%), and fixed-rate mortgages (0.8%).
Total credit union memberships grew 0.4% during July to 112.2 million.
Credit union savings balances declined 0.6% in July declined, compare with a 1.4% increase in June. One-year certificates led savings growth during the month, rising 1.4%, followed by month market accounts (0.2%). On the decline during the month were share drafts (-4.2%), regular shares (-0.7%) and individual retirement accounts (-0.2%).
The loan-to-savings ratio increased to 81% in July from 79.6% in June. “We are starting to see a slow but steady upward trend in average interest rates, both on loans and deposits,” van Rijn said. “But this hasn’t increased savings much yet, so the fast loan growth has led to the highest loan-to-savings ratio since 2009.”
The movement’s overall capital-to-asset ratio remained at 10.6% during July.
“We expect the Fed to increase rates around 1.0% over the next year or so, which should eventually decrease loan growth and increase savings deposits,” van Rijn said. “But loan and membership growth should remain strong through 2018.”