Message from the CEO.

I have to start this message by expressing how truly excited I am to be here at Vancity. After my first months on the job, it’s evident to me that we have much potential and a very bright future ahead, for our members and for this credit union. I can also tell you that Vancity’s drive to make the world a fairer, cleaner and better place is real – it’s embedded in the core of our organization and all the folks that work here. It really is who we are and it is exceptional.

That said, I can understand why people looking at our 2023 bottom-line results might find my excitement odd. After all, we’re ending last year with operating earnings of just $1.1 million, and an after-tax net loss of $1.3 million. And because our Shared Success allocations to members and communities depend on our profits, there will be no Shared Success dividends disbursed to members this year. This comes after a record Shared Success allocation over the last two years.

After almost 30 years in the financial sector, I know that single-year’s numbers tell only part of the story and have to be taken in context. Vancity is on solid financial footing with strong capital reserves, a growing balance sheet, and an expanding member base. Our member satisfaction rate remains high, with an average score of 81 per cent. And members continue to trust us with more of their banking needs, with our net lending growing by $547 million and our members investing $117 million more with us in total in 2023.

Our results are also not surprising given the economy around us. Rising costs and the rapid increase in interest rates over the last two years have affected many members who are finding it more difficult to make ends meet or save for the future.

Financial institutions are not immune to this reality and Vancity is no exception. The unprecedented rise in interest rates drove many members to convert deposit balances to higher-rate term deposits, significantly increasing our funding costs. At the same time, Vancity continues to hold many loans that were issued when interest rates were at record lows and higher interest rates have reduced demand for new loans. As a result, our net interest-based income this year dropped more than 23 per cent from 2022 even though our lending portfolio actually grew by 2.2 per cent in 2023. Combined with stock market weakness earlier in the year driving a reduction in revenue from our Sustainable Wealth Management division, weaker performance was a natural outcome.

This is a reality many financial institutions face. The really good news is that we anticipated, and prepared for, this scenario. Taking a disciplined approach to our business planning, we made sure to be in a very strong position with respect to capital reserves and have ample reserves set aside to cover various contingencies, even if this allocation constrained our 2023 profitability.

We also prepared for the impact of these realities on our Shared Success community grants, which depend on our financial performance and saw record disbursements over the last two years. It is important that we continue to support our communities through our multi-year funding partnerships and local grants, while retaining flexibility to respond to emerging needs, and we set aside money for these purposes in 2023. We will also disburse over $470,000 in enviroFund™ grants for community-level climate action this year.

We have also been working hard to further diversify our revenue. In 2023, for example, our overall non-interest income grew by almost 17 per cent over 2022. Within this category, our enviro™ Visa* credit card revenues are steadily growing and have for months been our highest ever. And with the continued growth of our investment inflows later in 2023, our investment fee income is also now back to 2022 levels. Building on these trends is a key goal for 2024 and 2025.

* Trademark of Visa Ltd., used under licence.

We have the strong fundamentals, capital reserves and business plan to weather the unprecedented operating environment we are currently facing. And we must continue to navigate the disruption and change that will characterize financial services in the coming years. For those and many other reasons, you can expect to see us increasing our commitment to innovation and operational excellence.

This is critical for us as a credit union. The stronger our financial position is, the better positioned we are to help our members and communities get through the major challenges they are facing: the rising cost of living, the availability of affordable housing, the raging climate crisis, and continued inequality and exclusion, often compounded by legacies of systemic discrimination and oppression.

For decades, Vancity has worked with and for members to do something about these challenges. We’ve always believed banking needs to work for people, and we are globally recognized for doing banking differently. I am convinced that this makes us built for this moment when people are expecting more from their banking institution – to be there for them at their time of need, to manage their money in a way that delivers strong returns, that aligns with their values and that helps make a better world for everyone. Emerging from the current economic realities in a position of strength will enable us to live up to this potential.