VANCOUVER, B.C. – Central 1 Credit Union (Central 1) today announced its fourth quarter and 2018 results, featuring robust profit and increased investment in strategic initiatives to deliver the solutions required for the future of the credit union system in Canada.
“We’re investing in strategic initiatives to support credit unions as they meet the expanding expectations of Canadians for financial services and related solutions,” said Mark Blucher, President and CEO of Central 1. “This year we made progress towards our goals, while clarifying our aspirations for the future. We rounded out our leadership team with enhanced expertise and delivered a strategic plan to enable a transformed ecosystem for the future of banking to our members and clients––with flexible digital platforms and cost-effective, powerful funding programs and financial products. As we continue to transform, there is still work ahead of us; several strategic initiatives continue into 2019 and beyond.”
In 2018, Central 1 progressed in the development of Forge, our new smart user experience (UX) platform, which we launched in October with its official name. Built on Backbase’s global-leading digital platform, Forge will put control in the hands of clients, providing the flexibility to design and configure their digital branch with an unparalleled user experience. We’re collaborating with early adopter clients on the development and launch of two initial products, and we continue to invest in this foundational platform to realize new client development opportunities. Forge will be the foundational platform of Central 1’s digital services as we move forward, while we continue to deliver innovative products such as those for small business customers and authenticated, voice-activated banking.
To enhance value in our payments business, we continued to focus on building scale by offering services outside the credit union system. In 2018, we increased scale, and the overall volumes allow us to lower prices on related products for each of our members. We believe this demonstrates Central 1’s ability to also serve larger scale financial institutions. In addition, throughout the year, Central 1 has taken steps to further support, educate and lead our clients through the ongoing Payments Modernization initiatives impacting the industry.
During the year, Treasury took opportunities to expand its client-base in other regions in Canada and to increase the depth of its product offerings. In the spirit of our dedication to social responsibility, we signed the UN supported Principles for Responsible Investment (PRI), joining more than 2,000 other organisations around the world that have publicly demonstrated their commitment to including environmental, social and governance factors in our investment decision making and practices.
Our total assets of $16.9 billion at December 31, 2018 decreased $1.1 billion from a year ago, with the majority of the decrease due to the withdrawal of Coast Capital Savings Federal Credit Union’s (Coast Capital) mandatory deposits, as a pre-requisite for Coast Capital to continue as a federal credit union, effective November 1, 2018. Excluding Coast Capital’s withdrawals, our total assets would have increased $0.4 billion from a year ago.
Profit after tax of $82.9 million for 2018 increased $34.3 million from last year. This provides a return on average equity of 7.2 per cent compared to 4.4 per cent in 2017, and an increase in our Tier 1 Capital Ratio to 37.4 per cent from 35.7 per cent in 2017.
Interest margin expanded in 2018 due to changes in our asset mix and higher interest rates. Net financial income of $58.0 million decreased $15.6 million year-over-year primarily driven by net realized and unrealized losses which were $42.8 million higher year-over-year, partially offset by higher interest margin.
Non-financial income from our foreign exchange services and increased revenue from growth in Interac e-Transfer® volumes along with one-time gains totaling $82.9 million realized from transactions surrounding our system affiliates contributed to the majority of the increase in profit. To support future growth, we continued to make significant investments in our strategic initiatives including the development of Forge.
About Central 1
Central 1 is a preferred partner for financial, digital banking and payment products and services – fuelling the success of businesses across Canada. With $16.9 billion in assets, we leverage our scale, strength and expertise to power progress for more than 250 credit unions and other financial institutions, enhancing the financial well-being of more than 5 million customers from coast to coast. For more information, visit www.central1.com.
Caution Regarding Forward Looking Statements
This press release contains forward-looking statements based on assumptions, uncertainties and management’s best estimates of future events. These include, without limitation, statements contain the words “may,” “will,” “intends” and “anticipates” and other similar words and expressions. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made. Actual results may differ materially from those currently anticipated. Securityholders are cautioned that such forward-looking statements involve risks and uncertainties. Certain important assumptions by Central 1 in making forward-looking statements include, but are not limited to, competitive conditions, economic conditions and regulatory considerations. Important risk factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements include economic risks, regulatory risks and other risks detailed from time to time in Central 1’s periodic reports filed with securities regulators. Given these risks, the reader is cautioned not to place undue reliance on forward-looking statements. Central 1 undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable laws.
Member & External Communications Manager
Central 1 Credit Union
T 604.737.5907 or 1.800.661.6813 ext. 5907
Chief Investment Officer
Central 1 Credit Union
T 905-282-8588 or 1 800.661.6813 ext. 8588