Prudence N. Barnes, Contributor
Members of the security forces face tough situations in the normal course of their duties. The Jamaica Police Cooperative Credit Union exists to make their financial lives easier. - IAN ALLEN/STAFF PHOTOGRAPHER
THE JAMAICA Police Cooperative Credit Union (JPCCU) has surpassed the $1billion mark in assets for the first time in its 50 years of existence, as members seek financing to meet living expenses, make business investments and other measures to enhance their quality of life.
According to the JPCCU's 2004 Annual Report, its assets grew by 22.8 per cent from $834 million at the end of 2003 to $1.02 billion in 2004, while its net surplus increased by nine per cent from $53.4 million in 2003 to $58.2 million.
General manager of JPCCU, Wilton Williams said that the positive growth in the company's assets was impacted by a 22. 1 per cent increase in its loan portfolio which grew from $613.6 million in 2003 to $749.7 million at the end of 2004.
CELEBRATING 50 YEARS
The company's net loan portfolio represents over 70 per cent of the assets of the credit union. The report comes as the JPCCU celebrates its 50th anniversary and as the Police Federation remains locked in salary negotiations with the Government.
The JPCCU was established on July 4, 1955 "to encourage collective savings among members of the force". Giving the background to the creation of the credit union in 1955, the introduction to the annual report noted that "the institution was also concerned with devising strategies which could supplement the poor police salary packages of the 1950s."
At present, the credit union which has just under 10,000 members, serves members of the Jamaica Constabulary Force and their families such as spouses, children, grand-children, parents and siblings, as well as former members of the force.
Mr. Williams told the Financial Gleaner that the credit union granted over 15,000 loans to members valued at over $522,727,661.71 in 2004.
According to the annual report, the highest portion of the loans, $188.8 million, was granted for domestic and personal purposes; $118. 4 million for home improvement and acquisition; $70.8 million for motor vehicles; $35.5 million for rent, rates and utilities; $29.42 million for debt consolidation; $28.2 million for furniture and appliances; $26.76 million for educational purposes; $7.56 million for medical expenses; $1.5 million for funeral expenses and over $604,000 for legal expenses.
Among the other purposes for which loans were granted, were small business development ($9.074 million); travel and vacation ($3.8 million); wedding expenses ($1.8 million) and agriculture ($421,500).
Mr. Williams said that the company has experienced consistent growth every year since its establishment in 1955, with loan balance doubling between the period 2000 and 2004, attributing this to efforts on the part of the credit union to improve service and the need of members to fill gaps in income.
"In 2000, our loan balance was $309.7 million. What has happened is that we have more than doubled that in the four years since, so now we are at just about three quarters of a billion dollars," he said, adding that "that period we have grown by 142 per cent. I believe that that is remarkable growth over that period for any financial institution," he stated.
However, this year's net surplus was tempered by a number of factors, Mr. Williams noted, citing the overhauling of the credit union to improve service to its clients; the lack of movement in the salaries of members of the force, and the impending Bank of Jamaica Credit Union Act which precipitated the curtailing of the level of unsecured loans which the credit union normally accommodated.
NEW STRUCTURE
"We spent 2003 overhauling the organisational structure. So actually, we now have a new structure and this we believe, is delivering greater value to our shareholders. It has sent up our operating expenses for 2004 a little, but that is something that we had expected, and as you know, we do not look at business cycles in one-year periods, but in three to five years. So we expect that in 2005, 2006, some of the values which were not unleashed in 2004 will be unleashed then. So we are expecting an even rosier year in 2005 and 2006," the general manager said. The unaudited figures for 2005 are already indicating that the growth trend will continue apace, he observed, noting that figures up to May 2005 indicated an increase in the credit union's loan portfolio of over $800 million as well as other positive indicators.
Commenting on the wage
issue he said: "The wage dispute has affected us. Members save from their wages, and it is this savings that provides funds to on-lend," Mr. Williams explained.
NEW REGULATIONS
Elaborating on the proposed regulations, Mr. Williams expressed concern about a clause which calls for unsecured loans not to exceed five per cent of the company's total loan portfolio, and the fact that certain kinds of collateral such as furniture and appliances which have traditionally been acceptable forms of collateral in the credit unions, will not be allowed under the new regulations.
"Credit Unions over their many years of existence have always managed their risk well?.We (JPCCU) were able to grant unsecured loans above the five per cent of our loans portfolio. But yet our delinquency rate has always remained below that 1 percentage point. So we have experience in granting unsecured loans," he said
Citing the impact that this Act could have on its members, Mr. Williams stated: "Our members, given their wage levels, are not usually able, in many cases, to provide collateral that is acceptable collateral to the Bank of Jamaica, of real estate, motor vehicle, investments certificates etc. Instead they have been able to use furniture, appliances and literally using no collateral at all?when that is no longer accepted as collateral, then that means that a portion of our membership will be marginalised," he added, also suggesting that small businesses will also be affected.
He pointed that the credit union in 2004, moved to reduce the level of unsecured loans to bring its polices in line with the proposed Act as a preparatory to ensure licensing by the BOJ which will be required by the Act when it comes into effect. This, he said impacted on even more "spectacular growth," he stated.
In addition, the credit union has been taking pre-emptive steps to offer more budget counselling to its members to help them make the adjustment if the Act is passed in the current form, even as the credit union movement lobbies for some of these measures to be amended before the Act is passed.
"We have introduced budgeting seminars where we teach them how to budget, because that is where savings start. So what we have actually done is start to re-orient the mind from borrowing first and saving next to savings first and borrowing next," Mr. Williams said.
Despite serious concerns over the impending BOJ Credit Union Act, Mr. Williams said that the JPCCU was in an optimistic mood, moving ahead with expansion plans and other improvements to better serve its membership.
"We view the future with optimism. We have a strong management team. We have a strong board. We have a supervisory committee and a credit committee. So the pool of resources for decision making enhances our ability to assess and avoid those risks that we believe would not be in the best interest of the credit union to take on" he said.
Improvement Plans
Last year, the credit union undertook efforts to upgrade human resources; measures to make greater use of technology, reduce processing times for loans, and continued its emphasis on fiscal prudence, Mr. Williams said, adding that opening hours were extended by four hours per week to better facilitate members.
A major initiative for 2005, is the expansion of the JPCCU's St. James branch which is to be relocated from Gloucester Avenue to a larger facility at the Bay West Shopping Centre in Montego Bay Mr. Williams reported, adding that the 1700-square ft. facility is a $12 million acquisition aimed at improving services to its clients in St. James, Westmoreland, Hanover and parts of Trelawny. "This will allow us to put in more customer service facilities and staff to serve the western end of the island," Mr. Williams said.
In addition to the St. James office, the credit union has branches in Kingston and Mandeville along with agencies which offer services once per week in May Pen, Clarendon; Black River, St. Elizabeth and Negril, Westmoreland which were all established in 2004. An agency in St. Ann is now being upgraded to a full branch, the General Manager disclosed, adding that in 2005, agencies are to be established in even more parts of the island.
With respect to its 50 anniversary celebrations which began at the start of 2005, Mr. Williams said, that in addition to church services to open and close the celebrations, seminars had been held across the island; the Police credit union had donated $1 million to the JCF for the enhancement of the training school and another $1.5 million to police national and area sports activities. In September, Mr. Williams said, the Credit Union will award 50 scholarships to children of members for their excellent performance in the GSAT exams.
