2024 Earnings Round-Up: Saskatchewan Credit Unions Outperform While B.C. Credit Unions' Struggles Continue

The macroeconomic environment remains challenging for Canadian credit unions amid trade conflicts with both the U.S. and China. Our rated credit unions in the provinces of Saskatchewan and British Columbia have generally strong, albeit modestly deteriorating, asset quality, stable funding sources, and solid capital buffers, but earnings performance in 2024 varied significantly between the two provinces.

Key highlights include the following:

-- Earnings for our rated Canadian credit unions once again diverged in 2024, as aggregate earnings increased 27% for the Saskatchewan credit unions, while those in B.C. saw a significant decline of 81%.

-- Credit quality metrics weakened in 2024 in both provinces, and we are concerned that a prolonged trade conflict could result in a combination of an economic recession, rising unemployment, and pockets of higher inflation that would lead to further asset quality deterioration.

-- Capital levels at all six credit unions remain sound and provide a sufficient cushion to absorb heightened losses.

"We continue to expect the overall impact from a significant proportion of loan books repricing in 2025 and 2026 to be positive for credit union net interest margins, further supported by lower deposit funding costs. However, the revenue pickup may be lower than previously expected, given the substantial decline in interest rates through 2024 and into 2025," said Josh Veenkamp, Assistant Vice President, North American Financial Institution Ratings.