GSB Cooperative retools

The GSB Cooperative Credit Union Limited has indicated that its recent tender for a new loan-administration system is one of several measures intended to improve efficiency and profitability post-JDX.

The government debt-switching exercise in January 2010 resulted in a loss of original contract interest of $4 million, and for the current year under review, 2010, total interest earnings was $58,831,682 when compared to $76,703,187 for the previous year. This reflected a 24 per cent reduction in interest earnings for the credit union.

CEO Courtney Lodge states that a better system is needed for improved loan-portfolio performance. The new system, he said, must "provide a faster turnaround time in loan processing, a means of measuring member service delivery, increased efficiency through loan-processing automation, and also increase productivity through use of enabling technology".

To cope with operating expenses, which have increased by 14 per cent over the last two years, the organisation has implemented energy-conservation measures such as rewiring buildings, decentralising control of lighting, monitoring utilities consumption to minimise leakage or wastage, and using more electronic communication for reports versus printing on paper. This is in addition to an on-going restructuring programme that saw five fixed-salary operations positions made redundant, and three variable-salary sales positions created.

The credit union also plans to introduce for 2011 a cambio operation, and has targeted increased sales for the Family Indemnity Plan. It will also be expecting increased revenue from consulting services offered to GSB members.

Although suffering a 5.7 per cent rate in loan delinquencies for 2010 and the 24 per cent decline in interest income, the credit union in 2010 managed to grow the loan portfolio by a net amount of $146.6 million, or nine per cent, at year ending December 2010.

The gross loans disbursement totalling $1.127 billion for 2010 was $298 million, or 35.99 per cent, better than the $828.46 million disbursed in 2009.

"Our GSB team achieved 102 per cent, or $209 million, of the 2010 savings target of $204 million," Lodge stated.

"Additionally, we have been retooling," he added, indicating that a new call centre facility produced an 82 per cent increase in loans processed after implementation, and standard operating procedures were re-engineered.

Restructuring

GSB, he indicated, had also been "restructuring to create a greater level of member service through the development and launch of our Wealth Development Unit, which will provide personal financial services to our members".

Since the onset of the recession in September 2008, company capitalisation has improved by 26 per cent. "It should be noted that in 2009, the GSB adopted permanent shares and qualified members must hold a minimum of $2,600 in permanent shares that are deemed as share capital," the CEO clarified.

GSB credit union, which currently has membership composed of government workers and their relatives - approximately 21,400 as at February 1 - indicates that the opening of its membership bond to other professional groups in 2010 will bring a 10 per cent improvement in numbers this year.

The change is expected to counteract any contraction by the government sector as the group is being restructured by the Public Sector Transformation process.

"We do not anticipate any significant negative impact as we have been preparing for same by widening our bond in order to minimise any potential. This has resulted in a positive effect on the credit union, overall. Our target market is now expanded, and as such we are able to bring our products and services to a wider net. This wider target market also presents opportunities for cross-selling. This wider base allows for risk mitigation as we are less concentrated in one sector/ industry," the CEO stated.

The estimated size of this market is approximately 225,000 persons islandwide. Lodge expects a penetration of around 10 per cent in year one.

Plant-improvement projects pursued since 2008 include renovation work on a building at 8 East Avenue at a capital cost of $6 million. The credit union also spent money on introducing a corporate social responsibility programme to staff. The expected returns from all training, plant, and technology spend is expected to be 15.2 per cent for both 2010 and 2011.

GSB Cooperative Credit Union was registered on July 2, 1946, under the Industrial and Provident Societies Law.