Why is the Collective ROA of the Corporate Credit Union System Falling?

Through August the average ROA of the 33 “retail” corporate credit unions has fallen from 32 basis points one year ago to 22 bp in August. Why?

 
 

Through August the average ROA of the 33 “retail” corporate credit unions has fallen from 32 basis points one year ago to 22 bp in August. Why?

There are three factors that cause the bottom line:

  • Two revenue sources: the net interest margin and non-interest income
  • Operating expenses.


Looking at the last 36 monthly results, there are two events that coincide with the changes in the bottom line. From January through April of 2001, total assets in the Corporate system increased 50%. This sudden jump lowered the operating expense ratio to average assets, a change partially offset by a fall in the non-interest income to average assets.

The monthly ROA for all corporates continues to fall (22 BP in August)

 

 

 

Nov. 11, 2002


Comments

 
 
 
  • I also believe some corporates are giving away non-interest income to gain market share in new territory that they don't necessarily belong.
    Anonymous