Three out of four credit unions paid dividend to members in 2025

The number of credit unions has declined as the sector consolidates into larger credit unions

Ronan Kilbane of RBK, who carried out the 14th Annual Credit Union Benchmarking Report. Three out of four credit unions paid a dividend to members in 2025, the report showed.

Three out of four credit unions paid a dividend to members in 2025, up from 62% in 2024 and just 18% in 2023, a new report published on Wednesday showed.

Dividend payments reached their highest level in recent years while the credit union loan book rose for a fourth consecutive year, according to RBK’s 14th Annual Credit Union Benchmarking Report.  

"The rise in dividend-paying credit unions may serve as a further motivator for those institutions yet to resume payments. Higher dividend rates also have the potential to attract new members and strengthen the value proposition of membership relative to other financial services providers," the report said.

According to the Central Bank, there were 172 credit unions active and reporting as of September 2025, down from 228 in September 2020. The number of credit unions has declined slowly as the sector consolidates into a smaller number of larger credit unions. One in three credit unions are considering some form of alliance in the medium-term, said the report.

Home improvement loans and car loans remain the fastest growing loan categories, with mortgage lending also on the increase. Investment returns have nearly trebled since 2022, while wages-to-income and cost-to-income ratios have continued to improve. The Central Bank revised its lending concentration limits in 2025, opening new capacity for house and business credit. For house lending the new concentration limit is set at 30% of total assets, and for business lending the new limit is 15%. "The removal of tiering levels the playing field for smaller credit unions, enabling them to compete more effectively in the mortgage and commercial loans markets," said the report.

Commenting on the report, RBK partner Ronan Kilbane said a fourth consecutive year of growth in the Loan to Asset Ratio, a near-trebling of investment performance since 2022, and an acceleration in dividend payments "all point to measurable progress across the main financial metrics. That improvement reflects both the discipline of recent years and the benefits of a higher interest rate environment," said Mr Kilbane. 

“However, the demands on boards and management teams have never been greater. The Central Bank has set clear expectations around lending growth, operational resilience, IT governance, and climate risk, while the revisions to concentration limits for house and business lending open up new growth opportunities."

Reserves meeting requirements

The report said that all credit unions report a total reserves ratio well in excess of the minimum regulatory requirement of 10%, which ensures that they have sufficient capital reserves to meet their obligations. Average community credit union reserves of 16.4% in 2025 were in line with 16.6% in 2024, with the reduction due to increased dividend payments. The corresponding figure for industrial credit unions edged up slightly to 16.6%.

The report found the average cost-to-income ratio of 72% remains substantially above that of the main retail banks, "highlighting continued scope for efficiency improvement". Wages-to-income ratio of 28% in 2025 was broadly stable year-on-year and continued the positive trajectory from 32% in 2022. This improvement mirrors the income growth achieved in recent years "which has diluted the ratio even as staff costs have increased".

Skills shortages remain the primary hiring challenge, followed by salary competitiveness, according to the report. “Skills shortages and the unfinished work of operational resilience are live issues for much of the sector. Credit unions are making progress on many fronts but cannot afford complacency. The pace of change required across technology, people, governance and lending shows no sign of slowing,” said Mr Kilbane.