Economic volatility continues to impact Ontario’s credit union sector

Credit union total assets grow, profitability improves slightly, while loan delinquencies increase over the past quarter

In its second 2023 quarterly outlook report for the Ontario credit unions and caisses populaires sector, the Financial Services Regulatory Authority of Ontario (FSRA) found that while there was year-over-year growth, sector profitability has slowed, and loan delinquency continues to increase. There is the possibility that future quarters will see further softening due to high inflation and rising interest rates.

Here are some of the key findings:

  • Profitability in 2Q-2023 improved by 2 basis points (bps) to 20 bps, but 45 bps below last year. Higher loan interest and lower income taxes were more than offset by higher interest expenses and borrowing costs.
  • Credit quality of mortgage portfolios continued to decline as housing markets and mortgage affordability were challenged.
  • Delinquency (over 30-days) on residential mortgages continues to increase, up 15 bps from last year. Commercial loans are seeing a decreasing trend in delinquencies, down 20 bps from last quarter and 10 bps year-over-year.
  • At 2Q-2023 end, sector assets totaled $93.0 billion, reflecting a year-over-year increase of $5.6 billion (up 6.4%).
  • Liquidity remained strong at 2Q-2023 but was 70bps lower year over year.

FSRA’s Sector Outlook Report is published on a quarterly basis and provides analysis and commentary about the economy and most recent financial results reported by credit unions and caisses populaires in the Ontario sector.

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FSRA continues to work on behalf of all stakeholders, including consumers, to ensure financial safety, fairness, and choice for everyone.

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