Vancity releases 2023 financial results
March 7, 2024, Territories of Musqueam, Squamish and Tsleil-Waututh Nations/Vancouver B.C. - Vancity today released its 2023 financial results, showing areas of continued strength despite modest operating earnings amid a challenging rate environment.
The credit union achieved growth in overall net lending and Visa lines of business, welcomed more than 7,000 new members in 2023, and added $538 million to its total assets, solidifying its position as Canada’s largest community-based credit union. Balance sheet assets grew to $28.8 billion, representing a two per cent increase on the previous year. Total assets plus assets under administration grew to $35.5 billion. However, the rapid rise of interest rates, combined with changing member behaviour and stock market weakness resulted in the credit union posting operating earnings of $1.1 million, which translated to a modest net loss of $1.3 million -- after the deduction of investment share dividends to members, impairment expense on financial instruments, and the payment of taxes.
The unprecedented economic period characterized by a prolonged inverted yield curve resulted in significant compression of Vancity’s margins and negatively affected profitability in 2023. The credit union has taken meaningful actions to address future profitability, such as focusing on further diversifying revenue sources and attracting a greater share of everyday banking deposits.
"In a challenging year marked by increased interest rates and higher living costs, individuals from all walks of life felt the repercussions," said Vancity’s Chief Financial Officer Clayton Buckingham. "While Vancity was not exempt from these influences, we entered 2023 in position of strength and our financial standing remains strong, characterized by substantial capital reserves, a growing balance sheet, and a steadily expanding member base," said Clayton.
Vancity has taken a conservative approach this year to mitigate the effects of what is anticipated to be a continuing challenging economic environment for the credit union and its members. Vancity is in a very strong capital position and has set aside ample reserves to cover various contingencies, such as a possible increase in loan defaults, even though the allocation constrained bottom-line profitability in 2023.
“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, who was appointed Vancity President and CEO in January 2024.
“Global economic conditions have been volatile since 2020. Vancity clearly anticipated challenging periods were on the horizon. Management made strategic choices to ensure the credit union is in a strong position,” said Wellington. “Work is underway to diversify our revenue, operate more efficiently, and identify new revenue sources which will lead to improving profitability in future years. These efforts are strengthening our ability to invest in our members and communities.”
Each year, Vancity allocates 30 per cent of its net profits to its Shared Success program. Since 1994, more than $440 million has been allocated to members and communities through the program, including a record $54 million allocation during the last two years. Funding of the program is determined by financial performance.
Given 2023’s net financial results, there will be no member share dividends in 2024. However, Vancity will continue to support member communities in multi-year funding partnerships using money set aside in previous years. Vancity will also provide local grants through our community branch network and over $470,000* of credit card revenues will go toward supporting climate initiatives through enviroFund™.
Vancity’s Board Chair Rita Parikh commented, “Our members, the communities around us, and Vancity are all navigating an unprecedented economic environment. The Board is confident we have the right strategy and vision to not only withstand these external pressures, but also to continue being there for members when they need us, and continue addressing other major challenges members are facing, such as the climate crisis, inequality, and housing affordability.”
| Item | 2023 Result |
|---|---|
| Total assets | $28,835 million |
| Total assets plus assets under administration | $35,513 million |
| Total operating income | $489 million |
| Total operating expenses | $493 million |
| Net income/(loss) attributable to members | ($1.3 million) |
| Capital adequacy ratio | 14.0% |
| Members’ equity | $1,608 million |
| Shared Success Accrual | $0 |
| Return on members’ equity after Shared Success | -0.1% |
About Vancity
Vancity is a values-based financial co-operative serving the needs of its 570,000 member-owners and their communities, with offices and more than 50 branches located in Metro Vancouver, the Fraser Valley, Victoria, Squamish and Alert Bay, within the territories of the Coast Salish and Kwakwaka’wakw people. With $35.5 billion in assets plus assets under administration, Vancity is Canada’s largest credit union. Vancity uses its assets to help improve the financial well-being of its members while at the same time helping to develop healthy communities that are socially, economically and environmentally sustainable.
Media Relations
mediarelations@vancity.com
T: 778-837-0394
*this figure was adjusted on April 16, 2024