CONTENTS Agenda Vision, Mission & Values of the League Notice of Annual General Meeting Board of Directors Board of Directors Report Treasurer’s and Auditors Report Financial Statements Report of the Supervisory Committee Report of the Nominating Committee Congratulatory Resolution Management and Staff 2023 Highlights Appendices Prayer of St. Francis of Assisi 1 2 3 4 - 7 8 - 21 22 - 28 35 - 170 171 - 174 176 - 179 180 - 184 185 - 191 192 - 196 197 - 203 205
AGENDA 1. Call to Order and Prayer 2. Report of the Credentials Committee 3. Apologies for Absence 4. Reading and Confirmation of the Minutes of the 82nd Annual General Meeting held on June 1, 2023 - Minutes - Referrals 5. Reports: - Board of Directors - Treasurer and Auditor - Resolution araising from Treasurer’s Report - Distribution of surplus - Fixing of Maximum Liability - Supervisory Committee 6. Report of the Nomating Committee - Board of Directors - Supervisory Committee - Elections 7. Resolutions 8. Any Other Business 9. Adjournment 1
League Mission Statement League Vision Statement League Core Values JCCUL is an innovative, member-centric and technology-saavy employer of choice, facilitatting and enabling Co-operatives to be at the forefront of financial inclusion in Jamaica delivering J$10 Billion worth of value to its 1.5 million members by 2025 To enable the growth and development of Co-operatives in Jamaica through representation and services Fairness Integrity Transparency Co-operation Accountability Respect 2
Andrea Messam President Norris Gilbert I st Vice President Hector Stephenson 2nd Vice President Ms. Messam is the President of the JCCUL Board and Chairman of the Board of Cumax Wealth Management Ltd. She is also a Director of Broadcast & Allied Services Credit Union. Ms. Messam is currently the Chief Financial Officer at the RJRGleaner Communications Group, a position she has held since 2008. She has a Fellowship in the Association of Certified and Chartered Accountants of England and Wales, a Fellowship in the Institute of Chartered Accountant of Jamaica and has completed the Certified Professional Accountant examination in the United States of America. Ms. Messam has over 25 years of management experience with expertise in strategic planning, revenue generation, business development and auditing. Mr. Gilbert is the 1st Vice President of the League and has been on the Board since May 2014. He previously served as President of PWD Credit Union and has served on its Board since 2001. He is also the Senior Director, of Finance and Accounts at the Ministry of Agriculture & Fisheries and a part-time lecturer at Northern Caribbean University. Mr. Gilbert holds a Master of Science in Accounting and a Bachelors of Business Administration. Mr. Stephenson is the 2nd Vice President of the League. He is also the President of EduCom Co-operative Credit Union. He was elected to serve as a Director on the Board of the Jamaica Co-operative Credit Union League (JCCUL) in 2020 and is a member of the Stabilization Fund Committee. Mr. Stephenson is the Executive Director of the Caribbean Examinations Council (CXC) Local Registrar in 2003. He is also a member of the Caribbean Examinations Council (CXC) National Committee, the CXC Final Awards Committee and a member of the National Qualifications Framework Committee of Jamaica. Mr. Stephenson began his professional career as a teacher of Integrated Science at St. Georges College in 1983. During his sojourn at St Georges, he served as Grade Supervisor and Dean of Discipline before being awarded The Peter Hans Kolvenbach Scholarship to pursue a Master’s Degree in Secondary School Supervision and Administration at Boston College University in Massachusetts, USA. In 1989, Mr. Stephenson was named Dean of Students at St. Georges College, then promoted to Vice-Principal in 1991 and Principal the following year. Mr. Stephenson also completed diplomas in Human Resources Development and Management Studies at the Institute of Management and Production (IMP) and Jamaica Institute Management respectively. DIRECTORS
Bornette Donaldson Treasurer Mr. Donaldson is the Treasurer of the League. He has been a member of the Board of Directors of the C&WJ Co-operative Credit Union Limited since 2019, currently serving as Vice President. Mr. Donaldson has over 20 years’ experience in the areas of Financial Management, Project Management, Strategic Planning & Consulting, Sales and Entrepreneurship. Currently, he is a Senior Manager at Jamaica Public Service Company Limited and holds the position of Head of Department, Financial Planning & Analysis, Treasury and Investor Relations. In the past, he has held several positions including; Manager of the Cable & Wireless Jamaica Pension Plan, Commercial and Finance Manager at Red Stripe Jamaica Limited, as well as Business Strategy and Project Manager at Jamaica Money Market Brokers Limited. Mr. Donaldson holds a Master of Science Degree in Economics, a Master of Business Administration specializing in Finance and a Bachelor of Science Degree in Economics from the University of the West Indies. In 2002 he attained the Project Management Professional designation from the Project Management Institute (PMI). He has also served as an Adjunct Lecturer, at Mona School of Business & Management, specializing in Finance and Economics at the graduate and undergraduate levels. Mr. Ewan is the Assistant Treasurer of the League. He is also the Treasurer on the Board of Directors of First Heritage Co-operative Credit Union Limited, Director of FHC Investments Limited and the Chairman of the Finance and Operations Committee. Mr. Ewan is currently the CEO of 138 Student Living Jamaica Limited. He is a Certified Accountant, a Fellow of the Association of Chartered Certified Accountants FCCA, UK. He also holds a master’s degree with a concentration in Finance from Manchester Business School, UK. Mr. Ewan has vast experience in several industries, spanning Accounting, Shipping, Education, Energy Efficiency, and the Distributive Trade. His expertise includes accounting, finance, management consulting, human resources management, facilities management and leadership. Mr. Bourne is the Secretary of the League. He previously served as President of Manchester Co-operative Credit Union. He has over 20 years’ experience in the field of education and has taught at several institutions including Knox College, Knox Community College, Management Institute of National Development and Church Teachers’ College. He is currently the Principal of Knox College and also serves as a member of the executive of the Jamaica Association of Principals of Secondary Schools; and Chairman of the Education Commission of the United Church in Jamaica and the Cayman Islands. Mr. Bourne holds a Master’s Degree in Education from St. Mary’s University of Minnesota, a Bachelor of Arts Degree in Accounting & Financial Management from the University of Sunderland, UK as well as other certificates and diplomas in various subjects. He is currently pursuing a Doctoral Degree in Leadership. Mr. Smith is currently the Assistant Secretary of the League. He is also Director on the JTA Credit Union’s board since 1994. He has a Master of Arts in History, Bachelor of Arts in Economics & History and a diploma in Education all from the University of the West Indies. He also holds a Post Graduate Diploma in Education from the University of Alberta, Canada. Cranston Ewan Director Alexander Bourne Director Patrick Smith Director DIRECTORS 5
Lambert S. Johnson Director Mr. Lambert Johnson is the Immediate Past President of the Jamaica Co-operative Credit Union League and former Chairman of CUMAX Wealth Management Limited. He served as President of Gateway Co-operative Credit Union and currently a member of the Board. He also served as a Director of the Caribbean Confederation of Credit Unions. Mr. Johnson is a distinguished Attorney-at-law with over 20 years’ experience and is a former Crown Counsel in the Office of the Director of Public Prosecutions. He then entered private practice in 2005 and founded the firm Johnson & Company Attorneys-at-law where he has gained extensive experience and expertise in the areas of commercial law, company law, conveyancing, civil litigation, family law and criminal law. He is a past president of the Cornwall Bar Association. Mr. Johnson holds a Bachelors of Law degree from the University of the West Indies and a certificate of Legal Education from the Norman Manley Law School. He also obtained certification from the University of Technology Jamaica, as a Real Estate Salesman and Real Estate Dealer. Mr. Blackwood is the current credit union managers’ representative on the League’s Board and has served in that position since May 2014. Mr. Blackwood is the General Manager of Portland Credit Union and is currently the President of the Jamaica Co-operative Credit Union Managers Association and the Caribbean Credit Union Managers Association. Mr. Blackwood has been working in the credit union movement for over 30 years and serve on a number of boards in the Parish of Portland. He holds a MBA, a B.Sc. in Professional Management, a Certificate in Co-operative Development and Management and a Teacher’s College Diploma. Martin Blackwood Director Mr. Graham has been a Director on the League’s Board since February 2024. He is the Assistant Treasurer of the Postal and Partners Cooperative Credit Union Limited. Mr. Graham has been the Manager of Local and International Mail Transport at Post and Telecommunications Department (Central Sorting Office) since 2013 and served in other positions since 2012. He is currently pursuing a Master’s Degree in Logistics & Supply Chain Management at NCU and holds a Batchelor’s Degree in Management Studies from that institution. Mr. Graham is actively engage in various societal affiliations and civic initiatives such as being a Justice of the Peace (JP), Council Member of the Jamaica Civil Service Association (JCSA) and Duke of Edinburgh Awards Gold award holder. Sheldon Graham Director Richard Hutchinson Director Mr. Hutchinson is currently the Assistant Treasurer of the Board of Lascelles Employees & Partners Credit Union and has several years of experience in the credit union movement. He is the Human Resource Officer at the Jamaica Stock Exchange. He has a M.Sc. in Computer Based Management Information Systems, UWI; Project Management Certificate, MSBM and B.Sc. in Human Resources Management, University of the Caribbean. DIRECTORS 6
Dr. McLaughlin has served the Jamaica Police Credit Union as a volunteer for over 17 years and is currently Chairman of the Board. Dr. McLaughlin has been a member of the Jamaica Constabulary Force since 1990 and is currently the Commanding Officer in charge of Counter Terrorism & Organised Crime Branch (C-TOC). He holds a PhD in Public Policy & Administration at Walden University, a Master’s Degree in Public Sector Management from the University of the West Indies and a Bachelor’s Degree in Economics and Public Administration. Anthony McLaughlin Director Mr. Pringle is the 2nd Vice President of the Board of JDF Credit Union and Chairman of the ICT Committee. He is employed to the Tax Administration Jamaica as a Network Security Analyst. Mr. Pringle holds a MSc in Information Security and Digital Forensics from the University of East London and a BSc in Information and Communication Technology from the Vocational Training Development Institute. He has over 26 years’ experience in the security field and expertise in criminal intelligence, information security, data protection, operational planning and confidentiality handling. Desmond Pringle Director Mr. Shelton is a long-standing volunteer at Grace Credit Union and currently serves as President of the Board. He previously served as Treasurer and a member of the Credit Committee. Mr. Shelton is the Risk & Compliance Manager for Sales & Distribution of GraceKennedy Foods Central. He previously worked as Internal Auditor, IT Infrastructure Integrity Manager & BCP Coordinator and IT Banking Support & Projects Manager at Capital & Credit Financial Group. Mr. Shelton is a fellow of ACCA and ICAJ, he is a Certified Ethical Hacker and has a Certificate in Business Continuity Planning and Disaster Recovery. Samuel Shelton Director Ms. Sparkes is Past President of the JPS & Partners Co-operative Credit Union and is currently Assistant Treasurer. She is an accomplished Management Executive with over 16 years’ experience in leading and implementing improved efficiency and productivity systems to deliver performance driven results oriented workplace best practices. Ms. Sparkes is employed to JAMALCO and is currently the Production and Maintenance Manager. She was previously employed to WINDALCO formerly Alcan Jamaica for eighteen (18) years. She holds a MBA in Engineering Management from the University of Manchester, a Bachelor of Sciences in Chemical and Process Engineering from the University of the West Indies, Diploma in Education, Certificate in Project Management and is a certified Project Manager. MS. Sparkes is also a Council Member of the Jamaica Institution of Engineers, member of the American Society of Chemical Engineers and a member of the Canadian Society of Chemical Engineers. Natalie Sparkes Director DIRECTORS 7
BOARD OF DIRECTORS REPORT for your ended DECEMBER 31, 2023 1. THE ECONOMY In 2023, Jamaica’s economic growth slowed to an estimated 2.6%, a notable decline from the 5.2% growth experienced in 2022. This deceleration was primarily driven by moderate expansions in both the services and goods producing industries, with growth rates of 2.9% and 2% respectively. The leading sectors fuelling this growth were tourism and mining, while agriculture, forestry & fishing, construction, and producers of government services saw no growth. Throughout the year, the Bank of Jamaica (BOJ) maintained a stringent monetary policy stance, holding the policy rate at 7%, with a continued focus on achieving an inflation target of 4% to 6%. Monetary policy decisions also included increases in both domestic and foreign currency cash reserve requirements (CRR) to 6% and 14% respectively. At December 2023, inflation stood at 7.5% for the calendar year and 7.3% fiscal year-to-date. Positive trends were observed in the labour market, with unemployment reaching a historic low of 4.2% in October 2023, surpassing previous lows of 4.5% recorded earlier in the year. The local currency experienced a slight depreciation, trading at an average exchange rate of $J154.95 to US$1 by December 31, 2023, marking a 1.9% decrease in value compared to 2022. In contrast, 2022 saw a 1.96% appreciation. The domestic financial system demonstrated resilience, with growth observed in loans, deposits, and assets. Loans and advances grew by 11.3% ($141.3 billion) relative to the expansion of 13% ($145.1 billion) for 2022. The personal loans division increased by 11.7% ($76.6 billion) compared with growth of 13.3% ($76.9 billion) in 2022. Deposits increased by 10.6% ($178.2 billion), surpassing the increase of 8% ($124.9 billion) observed in the preceding year. Total assets in the sector grew by an estimated 9.1% ($222.7 billion) for 2023, compared with growth of 6.5% ($150.1 billion) for 2022. 2. THE CREDIT UNION MOVEMENT The 25 credit unions that constitute the Movement, saw improvement in total assets, net loans and savings for the year ended December 31, 2023. The Movement also had marginal increase in membership. Perfomance Summary 6
BOARD OF DIRECTORS REPORT for your ended DECEMBER 31, 2023 Credit Union Growth Total savings grew by 11.6% from $125 billion in 2022 to $140 billion at the end of 2023. The value of net loans increased from $104.55 billion to $118.36 billion, a 13.2% increase over 2022. Total assets increased by 10.1% to $176.73 billion, up from $160.48 billion. Credit unions’ membership increased in 2023, moving to 1,030,604 from the 1,005,371 recorded at December 31, 2022. See Table 1. 3. OVERVIEW OF THE JCCUL GROUP The Group experienced a year of mixed fortuned with each Group entity performing differently in terms of financial results and progress towards achieving their strategic objectives. The League registered reasonable surpluses throughout the year, as prudent management of the Movement’s liquidity reserves and containment of expenses in line with budget were supplemented by a significant (but as yet unrealized) revaluation gain on the Cross Pen investment property in Clarendon. The League also launched a new project to assist credit unions with their compliance with the Data Protection Act and largely closed out a previous project to help implement enterprise risk management within the credit unions. There was however a continued struggle with ongoing internal project delays, particularly the implementation of the new ‘Olympic’ software package that is intended to improve the operations of Cumax and the League. The upgrade of the Movement’s AccessPlus® Debit MasterCard was largely completed as the cards have been issued and are becoming increasingly popular with credit union members. Additional work is being done to improve the security of the cards and the alert messaging system to combat noticeable incidents of fraud. Cumax Wealth Management’s income statement was dominated by continued large revaluation losses on its equity investment in Barita Investments Limited, despite occasional monthly revaluation gains and some received dividends. Cumax however continues to boast a strong capital base at year end and its fundamental business model remains viable. Quality Network was stretched for resources during the year with a number of projects including the PEARLS/CAMELS software coding, additional elements of the AccessPlus™ MasterCard™ Debit Card project and assisting with report writing for the League’s new operating system. Fairly high staff turnover, as is fairly common in the technology industry, meant almost constant recruitment throughout the year to fill vacancies and establish new positions that are intended to improve the Co-operative’s capacity and client satisfaction. Resulting shortfalls in professional service revenue resulted in QNET reporting a larger loss than was projected, despite progress towards diversifying its revenue base. Centralized Strategic Services continues to be managed prudently, with the accumulated deficit being consistently reduced by small yearly profits. The option of conversion to a co-operative is being explored. For the calendar year 2023, all 25 credit unions increased their total savings, with twelve credit unions growing by double digits. The Movement’s savings growth rate for 2023 surpassed that reported for 2022. Over the 12 months January to December 2023, 22 of the 25 credit unions achieved growth in loans. Of the 23 credit unions, 12 saw growth that exceeded the Movement’s 13.2% growth rate. While all 25 credit unions recorded positive change in their assets, only 15 achieved asset growth exceeding the recorded calendar year inflation of 7.5%. The Credit Union Movement’s performance in 2023 demonstrates a positive trajectory in terms of financial strength, lending activity, savings mobilization, and membership expansion. The movement’s ability to grow its assets, loans, savings, and membership amidst economic challenges underscores its resilience and relevance in the financial services sector. Moving forward, continued focus on member needs, innovation, and community engagement will likely sustain the momentum and further solidify the credit union movement’s position as a vital contributor to the financial well-being of its members and communities. Table 1 Credit Union Movement - Preliminary Statistical Information (December 31, 2023)
BOARD OF DIRECTORS REPORT for your ended DECEMBER 31, 2023 3. OVERVIEW OF THE JCCUL GROUP (cont’d) Centralized Strategic Services continues to be managed prudently, with the accumulated deficit being consistently reduced by small yearly profits. The option of conversion to a co-operative is being explored. 4. TRADE ASSOCIATION 4.1 GROUP TREASURY The Group Treasury Department was launched in April 2022 and the major responsibilities includes the administration of staff and corporate loans, Cumax back office operations, AccessPlus Debit MasterCard support, the management of the Movement’s Liquidity Reserves and the Demand Deposit Accounts. The Treasury Department has exceeded its targets, achieving remarkable results that have positively impacted our organization’s financial performance even in challenging market conditions. Recognizing the importance of risk management, the Treasury team has implemented robust strategies to identify, assess, and mitigate financial and operational risks. The JCCUL Group Treasury Team worked closely with Internal Audit and Risk in monitoring market conditions and prudent hedging practices, they have successfully protected our organization against adverse events and market volatility, safeguarding our financial stability. The Treasury Department has delivered reasonable returns on credit union’s liquidity reserves and demand deposit accounts. This was done by diversifying investments and capitalizing on opportunities in traditional and low risk investments. Key highlights for the year 2023 include: • Payment of over $ 266 million in interest to credit unions on liquidity reserves held with the League • The administration of over 24 staff and corporate loans • Over 95% score on the timely and accurate submission of regulatory reports Group Treasury plans to build on 2023’s achievements by exploring innovative strategies, accessing newer and more efficient technology and adapting to evolving financial market dynamics. We remain confident in the Treasury Department’s ability to continue driving value and contributing to the Group and the Movement’s financial success. 4.2 MARKETING, COMMUNICATIONS & RESEARCH In 2023, the Marketing, Communication and Research Department focused on capitalizing on opportunities to strengthen the credit union brand and promote its offerings. This included empowering its most valuable asset, its people, who are the heart of how credit unions deliver benefits to members and potential members. The Department spearheaded a range of successful events, including the JCCUL AGM and Convention, Credit Union Week celebrations, the International Credit Union Day Concert ‘Praise in the Park’, the Credit Union Financial Reality Fest, The AccessPlus© Debit Card Roadshow, the NeXGen Change Makers Youth Congress, and various networking activities. The Credit Unions of Jamaica (CUJ) brand was championed through the following: • Billboards in strategic locations across Jamaica • JUTC buses with “My Credit Union...My Family” ads. • Videoboard in Half Way Tree • Special feature pages in the Gleaner • Credit Union Week and International Credit Union Day activities • 52 weekly educational and promotional radio programmes of “Credit Union Vybz” on RJR 94.5 F.M • Scheduled updates to Social Media (Facebook and Instagram) and the Credit Unions of Jamaica website. • Advertising on the radio for brand presence and promoting credit union membership, and the CUJ brand • Educational awards function and speaking engagements Corporate Social Responsibilities The focus during the year was on education. Twentyfive PEP bursaries valued at $375,000 were offered to grade 6 PEP students who are youth savers, for backto-school expenses. Two tertiary scholarships, the Glen Francis (Credit Union) Scholarship valuing $500,000.00 and the Milburn Corrie Co-operative Scholarship valuing $250,000, were awarded to two University of the West Indies students. Ten book vouchers valued at $10,000.00 each from Kingston Bookshop were distributed as back-to-school prizes on social media. 10
BOARD OF DIRECTORS REPORT for your ended DECEMBER 31, 2023 Corporate Social Responsibilities (cont’d) The following were some of the activities undertaken for credit unions by the League during the year: 1. All credit unions were offered saving incentives for members, totalling $125,000.00, to be gifted to members at credit union AGMs. 2. Hybrid Board Consultation was held in April 2023. 3. International Womens’ Day Paint and Sip 4. NeXGen Change Makers’ Youth Congress 5. CULOC meetings. 6. Financial Literacy Month - Credit unions received financial literacy kit from the League and there was a one-day session in schools. A reality fair under the Credit Unions of Jamaica brand was executed where credit unions’ high schoolers participated in a stimulating exercise. Winning participants received savings vouchers to join credit unions. 7. Credit Union Week observance was marked with activities that included a Smile Jamaica Interview, national church service and a free gospel concert for credit union staff, volunteers, members and the public in Emancipation Park. Several guest gospel artistes entertained patrons. The theme for the week was “Celebrating the Credit Union Difference”. 8. Sponsorships, under the brand Credit Unions of Jamaica, totalled approx. $460,000.00 during the year. Donations under the Credit Unions of Jamaica brand, totalling approximately $280,000.00. 9. Credit Unions benefit from features in the Jamaica Gleaner and on the programme on RJR worth collectively, approximately $6.2 million. Research The following research projects were completed. 1. National Member Satisfaction Survey 2. Quarterly data report on Credit Union competitiveness and market share 3. Semi-annual environmental scan 4. CUBIZ magazine summarizing market insights 5. Customised research for Credit Unions Information is essential to our credit unions’ successful operations and the Marketing, Communication & Research Unit is committed to providing stakeholders with information that is both timely and useful. The Department strives to accurately assess and evaluate data that will create such useful and timely information. However, accurately assessing and producing useful information does not hinge on tools alone, it is also dependent on other inputs, that is, the data collected from credit unions and elsewhere. Publications that are produced using credit unions’ input include Quarterly Report on Credit Unions’ Performance and, Quarterly Competitive Market Share Analyses. Such information was provided as a means of helping to inform credit unions’ business actions and decisions. • Quarterly Report on Credit Unions’ Performance The quarterly report on credit unions’ performance provided the Movement with quarterly comparative data on credit unions’ growth indicators and other developments such as changes in peer group composition. • Market Share Information Three, Quarterly Competitive Market Share Analyses (March, June & September) were delivered as means of supplying our leaders with information and comparative performance data on the local financial sector. • National Survey The Department conducted a National Survey to ascertain the views held by members of the public and credit union members. The Survey sought to measure the interest in and knowledge of credit unions and their services. The survey provides information relating to members’ primary financial institutions, members’ satisfaction with credit unions’ services, and how these services compared to the services offered by other financial institutions. 11
BOARD OF DIRECTORS REPORT for your ended DECEMBER 31, 2023 Community and Advocacy The League still awaited the passage of the BOJ Credit Unions (Special Provisions) Act during the year, and continued to update credit unions on all related developments. The League also monitored legislative changes that affected the Movement throughout the year. Youth Congress: NeXGen Change Makers JCCUL held its first youth congress at the 2023 Convention and Strategic Planning retreat in Trelawny. The youth congress invited credit union staff who were 40 years and younger to become members of the NeX Generation (NeXGen) Change Makers. The NeXGen Change Makers are committed to championing the credit union difference, making effective local change in Jamaican communities, attracting young people to the credit union movement and professional advancement as global co-operators. NeXGen members got a crash course on the global credit union movement at the youth congress. They explored different organizations like the World Council, Caribbean Confederation of Credit Unions, CaribDE, and the Worldwide Foundation. They also learned about global initiatives such as the Sustainable Development Goals (SDGs) and Environmental, Social, and Governance (ESG) factors, and how their voices can contribute to positive change. Credit Union AccessPlus© Debit MasterCard Roadshow To promote the all-new AccessPlus© Debit MasterCard, a cross-country roadshow was carried out. All credit union offering the card participated in the exciting initiative. At each stop, credit union members were able to sign-up and collect their new card. The island-wide tour culminated in visits to credit unions, ensuring everyone had the chance to learn about the AccessPlus© Debit MasterCard. Credit Union of the Year Awards 2022 Winners The Credit Union of the Year Awards were presented at the 2023 Convention and the top awardees were as follows: Credit Union of the Year 2022: • John Peter Sullivan (Small-sized) - Grace Co-operative • Paul Thompson (Medium-sized) - Portland Co-operative • Renford Douglas (Large-sized) - Jamaica Police Co-operative Sectional Awards 2022 • Highest Net Capital Growth - Portland Co-operative • Highest Asset Growth - Portland Co-operative • Highest Solvency - JDF Co-operative CPD Online Awards 2022 • Top User - Howard Clarke of COK Sodality Co-operative • Top Performing Credit Union - Postal & Partners Co-operative Credit Union Foundation JCCUL continues its work to establish a Credit Union Foundation. In the interim, it continues to maintain the CODEFCO Basic School outreach programme. At year-end, the value of the CODEFCO account was $3.7 million. Jamaica Co-operative Credit Union League Annual General Meeting The Jamaica Co-operative Credit Union League (JCCUL) held its 82nd annual general meeting on December 9, 2023, at Sullivan Hall. Approximately 143 participants from the 25 credit unions attended online or in person. • Monthly Updates CUBIZ Eleven issues of the monthly publication, CUBIZ were circulated. This continued to be utilized as the tool through which the Movement’s leaders were kept abreast of happenings, within credit unions, the wider financial sector and the economy, which could impact the Movement. • Environment Scan The Business Environment Scans were provided in June and November 2023. The goal of the Environmental Scan is to inform credit unions’ decision-makers of potentially significant external changes before they manifested so that they would have sufficient lead time to be proactive in responding to changes. • Statistic on the Credit Union Movement The Marketing, Communication & Research Department also continued to submit quarterly and annual reports to statutory, regional and international institutions on behalf of credit unions. 12
BOARD OF DIRECTORS REPORT for your ended DECEMBER 31, 2023 The table below details the services provided during 2023. 4.3 MEMBER SERVICES Overview The Member Services Department team continued to provide value to our member credit unions via in–person and virtual meetings with credit unions to facilitate awareness sessions, provide assistance and answer queries. Advisory Services During the year, the Department’s Officers continued to be engaged in various credit union activities. The team attended 25 credit union annual/special general meetings, conducted 39 awareness sessions with credit union volunteers at their Board and Committee meetings, and developed key model policies and procedures to close gaps based on ERM Assessments conducted at credit unions. The Department facilitated nine meetings of the Jamaican Association of Co-operative Credit Union Managers (JACCUM) as credit union managers discussed and implemented initiatives to meet regulatory requirements and increase loans and savings market share. The department also provided secretariat and communication support services to the AccessPlus debit card upgrade project at 52 weekly internal project meetings and 26 fortnightly project meetings with credit union Operations and IT Managers. Support was also provided to the JCCUL Group banking software project. The team assisted the JCCUL subsidiary Centralized Strategic Services Limited (CSS) in its service delivery to credit unions, via the facilitation of five credit union planning retreats and provision of four HR services (hiring, job evaluation, disciplinary hearings). The Manager of the Department and two member service officers, co-facilitated and mentored at the 45th Caribbean Development Educators (CaribDE) Leadership Development session held in Montego Bay during the period March 12-18, 2023 where local and Caribbean co-operators successfully completed the one-week immersion programme. ERM Implementation The team continued to assist with the ERM Implementation programme alongside the League’s Stabilization Unit. There were 19 credit unions that were coached by the Member Services Department team and Consultants. This programme aimed to assist credit unions to have a robust risk management system which would be essential to all credit unions seeking to obtain a license from the Bank of Jamaica (BOJ). CPD Online Training Services: The facilitation of CPD Online training continued in 2023 through the League’s Service Agreement with CUNA. For the calendar year 2023, 18 local and two Caribbean credit unions subscribed to CPD Online. A total of 12,992 courses were completed for the year 2023 by 1,280 users and 193 users completed certificate courses and received CUNA e-certificates. The Department’s staff on average spent one hour daily training, guiding and providing technical and administrative support to credit unions’ HR Managers and Officers on how to manoeuvre the CPD Online system. Credit Union Volunteer and Employee Development Programmes The Credit Union Volunteer and Employee Development Programme continued in 2023 and was implemented by the CSS (see CSS report).
BOARD OF DIRECTORS REPORT for your ended DECEMBER 31, 2023 Compliance Table 5 below reflects Credit Unions’ compliance with the Liquidity Reserves and the financial reporting requirements as at December 31, 2022 and 2023. 4.4 STABILIZATION FUND Stabilization Fund Balance The Stabilization Fund balance was $2.07 billion as at December 31, 2023 compared to $1.93 billion for the corresponding period in 2022 representing an increase of 7.6%. Total revenues grew by 20.80% for the year 2023, moving from $224.5 million for the corresponding period in 2022 to $271.2 million. The increase in revenues was recorded in all income categories; dues, investment income, loan income and income from other sources. Stabilization dues increased by 7.65%; from $145.9 million in 2022 to $157.1 million in 2023. Income from investments and loans grew from $78.6 million in 2022 to $105.3 million in 2023; an increase of 33.90%. Total expenses for 2023 increased by 7.23% from $116.2 million in 2022 to $124.60 million. Credit union supervision and credit union assistance expenses accounted for 66.7% of total expenses. The Fund continued to offer a guarantee for losses under a Letter of Understanding and Agreement (LUA) to one credit union of $60 million. Stabilization Unit Activities for the Year 2023 The Unit embarked on a project to assist credit unions with the implementation of the DPA which took effect on December 1, 2023. A pilot project led by an external consultant was undertaken in three credit unions, one from each of the three peer groups with JCCUL staff replicating the model in the remaining 22 credit unions. The project duration from February to November 2023 included bi-monthly meetings with project leads from each credit union. Several policy templates, access to training videos, referrals for service providers for data protection officer were disseminated. The Unit also reviewed data asset inventory registers and privacy gap analysis reports from credit unions and supplied remediation plans. As at November 30, 2023 staff training and awareness sessions were conducted with all but one credit union as well as an awareness session for credit union management staff and volunteers. Credit unions were required to ensure that policies and procedures were adapted and approved by the Board. During the year, in addition to ongoing off-site monitoring of credit unions, the Unit also undertook an onsite assessment at one credit union. The Unit continued to engage with credit unions to close-out the Enterprise Risk Management (ERM) project that The Unit continued to engage with the Risk Managers’ Association as a medium to discuss matters relating to risk management and to provide training and awareness in areas of emerging risks. Credit Unions’ PEARLS Statistics (Unaudited) Net Institutional Capital /Total Assets Ratio As at December 31, 2023, all 25 credit unions met the minimum 8% standard for net institutional capital/total assets. Eleven credit unions recorded capital ratios below 10% compared to five for the corresponding period of 2022. Delinquency/Gross Loans Ratio Twelve credit unions were non-compliant with the ≤ 5% standard for this ratio, which was the same outcome as at December 2022. The delinquency rate for the noncompliant credit unions ranged from a high of 22.29% to a low of 5.08% which compared favourably with the outcomes for 2022 of 38.43% and 5.09% respectively. On a consolidated basis delinquent loans/gross loans was 5.43% compared to 6.73% as at December 31, 2022. Net Loans/Total Assets Ratio As at December 31, 2023, four credit unions failed to meet the minimum standard of 60%, which remained the same for the corresponding period in 2022. The highest ratio recorded was 80.09% (2022: 83.76% %) while the lowest was 38.73% (2022: 46.60%). Table 5 14
BOARD OF DIRECTORS REPORT for your ended DECEMBER 31, 2023 Staff Engagement Throughout the year, a number of initiatives were undertaken to improve staff engagement, and they were very well-received. We hosted our first Health and Wellness Fair for employees and their families, credit unions, and our neighbours. The conclusion of the Health Fair was marked by resounding success and positive outcomes, highlighting the importance of prioritizing wellness and promoting a healthy lifestyle. The Health Fair promoted employee engagement and participation, with a high turnout throughout the event. Employees actively engaged with various health and wellness providers, participated in workshops and informational sessions/demonstrations. The sessions covered a wide range of health matters, including nutrition, physical fitness, stress management, mental health, chronic illnesses and preventive care. All team members were invited to and almost everyone participated in our Annual General Meeting. This vehicle provided another platform for our people to nurture stronger relationships with their employer and to hear, first hand, information relating to the League’s activities and performance in the past year. The year culminated with the much-anticipated end-ofyear function which was held at the Jamaica Pegasus Hotel and attended by the majority of employees across the group. The occasion was a celebration filled with joy, camaraderie, and a show of appreciation for our employees for their hard work and dedication throughout the year, reinforcing their value to the organization. Five team members were recognized for an accumulative 120 years of service - milestones ranging between 10 to 35 years of employment. Credit Union HR Association (CUHRA) The Credit Union HR Association (CUHRA) was relaunched in 2023 with the goal of assisting HR practitioners in the Credit Union Movement, providing them with the opportunity to network, share ideas, collaborate, and exchange information, enabling them to advance both personally and professionally while making a more significant contribution to their respective organizations. 4.5 HUMAN RESOURCES Overview In this ever-evolving landscape, the Human Resources (HR) Department continues to play a pivotal role in driving organizational excellence and cultivating a high-performing culture, emphasizing collaboration, thereby fostering a positive work environment and aiding in the personal and professional development of our employees. Our efforts and initiatives in 2023 were geared towards enhancing organizational effectiveness and driving sustainable growth. We have successfully implemented various programmes aimed at enhancing employee engagement, fostering a culture of continuous learning and development, and strengthening our recruitment and retention strategies. Enriching Our Workforce During the year, we placed renewed focus on enriching the capabilities of the Team. We strengthened our Performance Management System through our carefully crafted Individual Development Plans (IDPs) designed to augment the knowledge, skills, and abilities of our workforce that are structurally aligned with the organization’s human resources strategy. Team members enjoyed an exclusive empowerment session with the world-renowned Executive Leadership Coach, Mr. Alvin Day, which centred on inspiring the group and rekindling a sense of mission. A copy of, If Caterpillars Can Fly, So Can I, was gifted to each team member. Continuous efforts are being made to enhance the capabilities of the Leadership Team and improve on succession planning. Our annual strategic planning session was reorganized where team members were allowed to first participate in an exclusive session to express their concerns and offer feedback, which informed the strategic initiatives for the upcoming year. Our People We continued to execute our recruitment strategy in very targeted ways aimed at attracting and retaining the right people, who demonstrate our Core Values and are motivated by the cooperative principles. Our employer brand was enhanced with the increased use of technology in the recruitment process. We commenced the year with 54 permanent team members and concluded with four less. Three new team members were onboarded and seven offboarded. We bade farewell into retirement, one employee who served the organization for 15 years. 15
BOARD OF DIRECTORS REPORT for your ended DECEMBER 31, 2023 the remaining incorporation documents for CMJR Ltd. (Nominee company of minority shareholder). The Board of Waterloo Towers Jamaica Limited (WTJL) has also been established and it aims to have the Waterloo properties fulfil their potential to earn significant returns. To that end, a retreat was scheduled for early 2024 to strategically look at the medium and long term plans for these properties. Sponsor Trustee Michael Anglin was elected a Director and Chairman of both WTR Limited and WTJL. The plan year ended with 29 active organizations, which included the Sponsor, JCCUL. Christiana Potato Growers Co-operative and National Union of Co-operative Societies continued to be inactive Cooperatives. There was no Partial Winding-up of the Scheme as there were no transfers of engagement or mergers of any credit unions or co-operative societies during the year. Outlook for 2024 The year 2023 presented a variety of challenges for us as a team. As we move forward, our focus will remain on further refining our HR practices, adapting to emerging trends and technologies, deepening the relationship with our people and ensuring that our workforce remains motivated, empowered, and equipped to drive the League’s success. We extend our sincere appreciation to all employees who worked tirelessly and with full dedication throughout the year. As we reflect on the past year’s accomplishments and challenges, let us also look forward with optimism and determination to the opportunities that lie ahead. 5. PENSION FUND Defined Benefit Plan (DB Plan) The total fund value of the Contributory Pension Scheme of the Jamaica Co-operative Credit Union League Limited (DB Plan) as at December 31, 2023 was $7.9 billion or 3% growth over the previous year’s total value of $7.5 billion. Return on plan assets (ROA) as at December 31, 2023 was 5.145% annualized, an increase from the 0.512% reported for the previous year. This was partially driven by the fair value gains experienced by the Fund due to the performance of its equity portfolio. Update on the Orchards Housing Development in St. Catherine The developers, Hartlands Holdings Investments Limited (HHIL) of the Orchards Housing Scheme received the outstanding Audited Financial Statements for 2019-2020 for HHIL. Chairman/Trustee David Grey represents the Fund as a Director of the HHIL Board, along with Trustee Althea Daley who continues to be the Chairman. At year end the Fund still awaited the splintering of the titles and had requested that the Agreement between HHIL and the Fund explicitly state that the 20 lots being offered were to collateralize the investment. None of the agreed returns on this investment has been made to date. Update on Waterloo/Dilcoosha (Waterloo Properties) On the establishment of the Board of WTR Limited, all documentation received on behalf of its Directors were submitted by the Fund’s attorney to McNamara, Inc. in St. Lucia for them to be registered there. The registration process will be completed on receipt of The 506 active members contributed $262.9 million for the year 2023, this represents a 0.27% increase in contributions when compared with $262.3 million contributed in the previous year. During the year, pension refunds totalled $64.84 million that was paid terminated persons who resigned. A death benefit in the amount of $34.50 million was paid to the named beneficiary of the member who passed away. The 13 retired active members opted to receive a lump sum with a reduced monthly pension. The lump sum totalled $40.28 million. Gross pension paid to pensioners during the year totalled $124.38 million Balance as at January 1, 2023 563 Terminated Members from Withdrawing Credit Union (2) Terminated Members (28) Members transferred to Deferred Pensioner (13) Deceased Members (1) Members Transferred to Pensioners (13) Balance as at December 31, 2023 506
BOARD OF DIRECTORS REPORT for your ended DECEMBER 31, 2023 Return on plan assets (ROA) as at December 31, 2023 was 3.444% annualized, an increase from the 0.769% annualized reported for the previous year. The performance was driven by the equity portfolio as well. Membership Data Deferred Pensioners Data During the year, pension refunds totalled $37.48 million that was paid to the 78 persons who resigned. PKF Aulous F Madden & Company were appointed as the Auditors of the Plan for 2023. The 2023 Audit is currently in progress for submission to the Financial Services Commission (FSC). The 5th Annual General Meeting for the DC Plan was held on July 29, 2023 as a virtual meeting. The 2022 Annual Report was also prepared in compliance with the Pension Legislation and filed with the FSC. The triennial valuation of the Plan became due as at December 31, 2022 and was submitted to the FSC on August 8, 2023. The 6th Annual General Meeting is scheduled for Saturday, July 6, 2024 and is expected to be another virtual meeting. was not spared. The Company continued to have both system and resource issues throughout 2023, however, notwithstanding that, the relevant workarounds were put in place to ensure that clients continued to get the services they required. Pensioners Data Balance as at January 1, 2023 108 New Pensioners 12 Retired Deferred Pensioners 4 Deceased Pensioners - (3) Balance as at December 31, 2023 121 Deferred Pensioners Data Balance as at January 1, 2023 117 New Deferred Pensioners 13 Retired Deferred Pensioners (6) Deceased Deferred Pensioners - Balance as at December 31, 2023 124 PKF Aulous F Madden & Company were appointed as the Auditors of the Fund for 2023. The 2023 Audit is to be finalized for submission to the Financial Services Commission (FSC). The 18th Annual General Meeting (AGM) of the JCUPF was held on July 26, 2023 as a virtual meeting. The Annual Report for 2022 was prepared in compliance with the Pension Legislation and filed with the FSC. The 2023 annual actuarial valuation (IAS19) required for the IFRS9 was completed and reports dispatched to the respective entities on February 22, 2024. The triennial valuation of the Fund became due as at December 31, 2022 and submitted to the FSC on August 8, 2023. The 19th Annual General Meeting of the Fund is scheduled to be another virtual meeting to be held on July 6, 2024. JCCUL Defined Contribution Plan (DC Plan) The year ended with 26 active participating sponsor organizations, which included sponsor, JCCUL. The total fund value as at December 31, 2023 was $525.37 million or 38% growth over the previous year’s total of $380.4 million. Balance as at January 1, 2023 453 New Members 125 Terminated (78) Deceased Members - Retired Members - Annuity Purchased - Balance as at December 31, 2023 500 Balance as at January 1, 2023 4 New Deferred Pensioners 15 Retired Deferred Pensioners - Deceased Deferred Pensioners - Balance as at December 31, 2023 500 17
BOARD OF DIRECTORS REPORT for your ended DECEMBER 31, 2023 The Collective Investment Scheme (CIS) products experienced a significant uptick in yields as a result of the change in interest rates, however, the performance of the Fund’s portfolios was affected by fair value impairment. In 2023, Cumax’s Money Market Fund was one of the top three best performing Funds in the market. Customer Service With the Company’s continued thrust to better serve its clients and by extension, the wider Financial Industry, the Company copped the Jamaica Stock Exchange, Member Dealers Award - Investor Relations, Stockbrokerage, at their Best Practice Awards Banquet held on December 6, 2023. Financial Performance For the 12 month ended December 31, 2023, Cumax Wealth Management Limited’s profitability stood at $431.3 million (unaudited) loss which was higher than the audited net deficit of -$100.2 million. The major item impacting the Company’s profitability was the volatility of its equity portfolio, particularly the Barita Investment Limited’s stock. Interest Income for the 12-month period was $210.95 million with a pay-out of $287.9 million in interest expense for the year. Non-Interest Income recorded $107.4 million for the year which was $363.36 million below 2022’s $255.9 million. This revenue line was significantly impacted by fair value losses. Operating expenses for the year amounted to $432 million which was $11.19 million above what was recorded in 2022. Total Assets at the end of 2023 was recorded at $5.58 billion which represented a slight reduction from the $4.67 billion, recorded in 2022. Way Forward With aggressive targets set for 2024, the Company will be focusing on increasing assets under management, while seeking to diversify its income stream, from a total reliance on credit unions and other existing clients, via new product offerings and an increased push of existing products. It will also be seeking to push for opportunities in Portfolio Management to drive fee and other new revenue streams and in addition, to develop a “pipe-line” for new and sustained business. The Company will continue to focus on expanding its market share by soliciting new business from the Eastern Caribbean regions in collaboration with the Caribbean Confederation of Credit Unions (CCCU). 6. SUBSIDIARIES 6.1 CUMAX WEALTH MANAGEMENT LTD. Overview In 2023, Cumax continued to seek out opportunities to augment its non-interest income revenue stream. Asset management and securities trading continued to be the main focus while investment banking services were also ramped up. During the year, those efforts were supported by the Company’s ongoing marketing thrust via both the traditional and digital media. In keeping with the Company’s growth plan, a decision was taken to embark on a Renounceable Rights Issue, in order to raise capital to support the plan. While that offer closed to existing shareholders in December 2023, the process continued, as shares were thereafter offered to non-shareholding credit unions. In addition, the Company embarked upon establishing its own Approved Retirement Scheme (Cumax ARS) and as such, the constitutive documents were approved by Tax Administration Jamaica in June 2023 and they are currently with the FSC awaiting final approval. With the Bank of Jamaica opting to maintain a high interest rate regime, many investment portfolios were negatively impacted by fair value losses and Cumax was not spared. The Company continued to have both system and resource issues throughout 2023, however, notwithstanding that, the relevant workarounds were put in place to ensure that clients continued to get the services they required. Product Performance Overall, the Company’s investment portfolio saw the continued dominance of equities and corporate bonds. However, this was augmented by significant increases in the holdings of Reverse Repos, given the high short term rates in the market. The high concentration of equities however, created additional volatility on the balance sheet due to the fair value changes brought on by the significant increase in interest rates and fluctuations in equity prices. The Company continued to seek to grow its portfolio management line of business which stood at just over J$20 billion at the end of 2023. The Company’s corporate bond which was floated in 2021 and raised over $1.2 billion, matured in 2023/Q2. Two bonds were subsequently issued successfully in 2023, totalling $1.55 billion 18
BOARD OF DIRECTORS REPORT for your ended DECEMBER 31, 2023 6.3 CENTRALIZED STRATEGIC SERVICES LIMITED (CSS) Performance The Centralized Strategic Services Limited (CSS) earned revenue of $32.99 million in 2023 ($33.9 million in 2022); gross profit of $23.91 million ($24.42 million in 2022) and profit after tax of $6.46 million ($4.83 million in 2022). Services The CSS’ earnings were mainly due to the take up of its 34 training workshops: 27 local and seven Caribbean training sessions including 14 customized sessions for various Credit Unions. In addition, revenue was earned from the provision of Advisory and Technical Services including facilitating five planning sessions for credit unions; 12 internal audits, four HR Services, one policy and procedures documentation and the provision of shared services (AML CFT) to one credit union. We also continued a project to establish a Stabilization Fund for the Grenada Credit Union League. The JCCUL Volunteer and Employee Development Programme which consisted of training workshops facilitated by the CSS continued in 2023. The workshops included Supervisory Management, Credit Administration, Conflict Resolution for Business Productivity, Teller Training, Delinquency Management and Collections, Orientation for Junior CU Employees, Business Continuity, IT Audit Techniques, Records Management, Dealing with Disgruntled Members, Mastering Your Emotional Intelligence, Responding to Audit Findings, Audit Techniques, Audit Report Writing and Critical Thinking, Orientation for CU Managers, Mortgage Lending, AML CFT CFP, Corporate Governance, Loans Securities Documentation, Facilities Management, Operations Management and Managing Your Portfolio to Minimize Your ECL. A total of over 640 participants benefited from the sessions held. 6.2 QUALITY NETWORK CO-OPERATIVE LIMITED (QNET) Debit Card Switch and ATM Service At the end of December 2023, there were 20 credit unions utilizing the debit card service. A total of 141,592 new cards were issued resulting in a 78% increase over the prior year, bringing the total number of cards in circulation to 428,776. This was a 49% increase over the prior year. Of the 428,776 cards issued, 98% or 418,747 are active. The 418,747 active cardholders on the network processed 4 million transactions at the end of December 2023, an 18% increase when compared to 2022. Transactions processed by credit union members increased by 2% when compared to the prior year. Ten of the 20 Issuers on the network are Acquirers, together they own 27 ATMs, serving eight of the fourteen parishes. At the end of December 2023, these ATMs represented 3% of the 892 ATMs on the Multilink network. QNET ended the year with a 99.67% availability on both the Access Plus, and Multilink Networks. The following table shows the top five performing ATMs on the JCCUL network along with their total number of transactions for 2023. TOP FIVE ATMS ON THE JCCUL NETWORK IN 2023 CREDIT UNION LOCATION TOTAL TRANSACTIONS Manchester Main Street 43,204 Jamaica Police St. Catherine 39,910 COK Sodality Slipe Road 23,266 Gateway Sam Sharpe Square 22,021 Manchester Christiana 21,379 TOTAL 149,780 TOP FIVE ATMS ON THE MULTILINK NETWORK IN 2023 CREDIT UNION LOCATION TOTAL TRANSACTIONS Trelawny CCU Falmouth 60,689 COK CCU Montego Bay 56,140 COK CCU Slipe Road 54,451 Manchester Main Street 49,034 COK CCU McMasters Plaza 47,286 TOTAL 267,600
BOARD OF DIRECTORS REPORT for your ended DECEMBER 31, 2023 7.2 CUNA CARIBBEAN INSURANCE JAMAICA LIMITED (CCIJ) Summary of the Insurance Coverage for January – December 2023 CUNA Caribbean Insurance Jamaica Limited (CCIJ) continues to be the leader in insurance coverage for Credit Unions and their members. For the period under review CCIJ covered over 1.3 million saving accounts, loan accounts, Family Indemnity Plan, Golden Harvest Savings Plan, Directors & Employees Group Life, Family Critical Illness Plan and Advance Protector Insurance The coverage on all products exceeded $286B. During 2023, CCIJ paid over $2.3 billion in claims to the movement. In recognition of the contribution made by each credit union in providing support administratively and referral support for our Products, in particular FIP, Administrative Fee of $321 million was paid out during the year. 8. VOLUNTEERS 8.1 BOARD OF DIRECTORS The Board was reconstituted in December 2023, after the last Annual General Meeting as follows: Ms Andrea Messam - President Mr. Norris Gilbert - 1st Vice President Mr. Hector Stephenson - 2nd Vice President Mr. Bornette Donaldson - Treasurer Mr. Cranston Ewan - Assistant Treasurer Mr. Alexander Bourne - Secretary Mr. Patrick Smith - Assistant Secretary Mr. Lambert Johnson - Mr. Martin Blackwood Mr. Sheldon Graham Mr. Richard Hutchinson Dr. Anthony McLaughlin Mr. Samuel Shelton Ms. Natalie Sparkes Board of Directors The 2024 JCIA Directors are: Lt Col Clifton Lumsden - JCCUL Lt Col Michael Anglin - JCCUL Ms. Ionie Henry, Secretary - NUCS Mr Bornette Donaldson - NUCS Andrea Messam - JCCUL Mr. Ray Howell - JTA Credit Union Lascelle Powell - BJ Staff Credit Union Staff JCIA had a number of staff changes during 2023. The organisation structure has 25 staff members housed at the head office and the three branches. There are plans to increase the staff complement at the branches to three persons up from the two that currently obtains. An employee of the month and branch of the quarter will be introduced in 2024 to help bolster our 80% staff satisfaction level and stem the level of staff turnover by being seen ‘as a good place to work’. Immediate Past President Performance Against Targets The Agency performed creditably during 2023 as in all four areas the performance was better than that of 2022 although still below the targets. Compliance The Organization remains compliant with both the Financial Services Commission and the Department of Cooperatives and Friendly Societies. Next Steps The Agency plans to extend its reach and to get new customers while retaining our existing clients. It will build on the 90% customer satisfaction level and strive to improve the 50% claims satisfaction experience. 7. AFFILIATES 7.1 JAMAICA CO-OPERATIVES INSURANCE AGENCY LIMITED (JCIA) Overview JCIA continued to grow from strength to strength. This is reflected in our, staff and customer satisfaction as well as the performance of our main business targets, namely Business Written, Cases Written, Commission and Service Charge as well as our handling of customer claims and our financial performance. These are detailed below. 20
BOARD OF DIRECTORS REPORT for your ended DECEMBER 31, 2023 8.2 SUPERVISORY COMMITTEE The following persons served the committee during the year: Mrs. Karen Robotham-Teape - Chairman Mrs. Mary Dick SSP Paulette Green Ms. Andrea Graveney Mr. Barrington Hibbert 9. FUTURE OUTLOOK The year 2024 will likely prove to be another challenging year for the Group, as we strive towards achieving the 5-year targets by December 2025 and fulfilling its mandate of adding more value to our member credit unions. The League will continue its own transformation, with focus on ensuring credit unions preparedness to transition to added regulatory oversight under the Credit Union (Special Provisions) Act, the date of implementation of which remains unknown. Some efforts will be made to establish strategic alliances and innovative support of its subsidiaries. Cumax will focus on growing its balance sheet to lessen the impact of the revaluation fluctuations. The financial performance for 2022 and 2023 having somewhat impaired the company’s ability to raise capital and the organization will week to sell down its holdings in the Barita equity stock wherever possible. This will possibly crystalize some of the losses but allowing reinvestment in more stable investments. If these efforts are successful, the Company’s overall financial fortunes are expected to improve by the end of 2024. QNET’s efforts at retooling to better serve as the Movement’s IT arm should start to show improved results in 2024- 5. While still projecting a small loss for 2024, the Co-operative’s increasing capacity, will focus on bringing valueadded products and services to credit unions, while exploring local and overseas opportunities such as whitelabelling of services in the public space. 10. ACKNOWLEDGEMENT & APPRECIATION Our League would like to express appreciation to past directors and volunteers for their dedicated and effective service to the Credit Union Movement. The employees of our League and its subsidiaries have exhibited commitment, dedication and hard work to ensure that the year was successful in spite of the many challenges experienced. Our Board would like to thank them and ask for their continuing support. Sincere thanks to our member credit unions for another year of partnership and service to the Jamaican population. Your League also partnered or collaborated with a number of organisations during the past year including CUNA Caribbean; Jamaica Co-operative Insurance Agency; Caribbean Confederation of Credit Unions; World Council of Credit Unions; Attorneys Livingston Alexander Levy; and our Auditors, Baker Tilly, among others. Special mention must be made of the Department of Co-operatives and Friendly Societies, that provided invaluable guidance and support throughout. Andrea Messam President 21
It is my pleasure to present the Treasurer’s report to this 83rd Annual General Meeting of the Jamaica Cooperative Credit Union League (JCCUL). The year 2023 proved a more promising year than 2022. This report outlines the financial performance of the League and its three (3) subsidiaries namely; Cumax Wealth Management Limited, Quality Network Co-operative Limited (QNET) and Centralized Strategic Services Limited (CSS). JCCUL has performed well for year 2023 with a strong financial position, indicative of the wellmanaged assets and prudent financial strategies by the management. JCCUL commenced its Treasury Operations in 2022 and this initiative has been, so far, quite successful. Despite the challenging economic climate locally and internationally, the JCCUL Group continued to provide value for the Credit Union Movement for 2023. 1. FINANCIAL OUTCOME FOR 2023 For 2003, the JCCUL Group improved it surplus position and recorded a consolidated net deficit after tax of $142 million (2022:$257 million net deficit). Chart 1 – 2023 Financial Highlights The Group also reported Total Assets of $20.5 billion, 12% or $2.2 billion above the 2022 total assets of $18.3 billion. The capital structure of the Group remains above regulatory standards. TREASURER’S REPORT for your ended DECEMBER 31, 2023 22
The unconsolidated results of the individual entities of the Group for 2023 are outlined in Table 1 below: Table 1: Group Entities Net Surplus 2023 vs 2022 The Company’s corporate bond which was floated in 2021 and raised over $1.2 billion, matured in 2023/Q2. Two bonds were subsequently issued successfully in 2023, totalling $1.55 billion The Collective Investment Scheme (CIS) products experienced a significant uptick in yields as a result of the change in interest rates, however, the performance of the Fund’s portfolios was affected by fair value impairment. In 2023, Cumax’s Money Market Fund was one of the top three best performing Funds in the market. 2. PORTFOLIO 2.1 JCCUL GROUP Balance Sheet The Group Balance Sheet reported assets of $20.5 billion for December 2023, (2022: $18.3 billion) a 12% change of $2.2 billion. Table 2: Asset Allocations across the Group 2023 vs. 2022 2.2 Return on Assets The before-tax return on assets of the Group for 2023 decreased to -2% in 2023, compared to -1% reported in 2022 and an after-tax return on assets of -0.69% compared to -1.4% for prior year. The Trade Association, Cumax Wealth, QNET and CSS had pre-tax return on assets of 1.8%, -7.7% and -14.2 % and 16.1%% respectively, compared to -0.9%, -2.1%, -4.2% and 12% respectively in the prior year as assets and profits generally decreased with the exception of JCCUL and CSS. TREASURER’S REPORT for your ended DECEMBER 31, 2023 23
TREASURER’S REPORT for your ended DECEMBER 31, 2023 Table 3 gives more detail of the years’ return-on-asset ratios. Table 3: Return on Assets 2023 vs 2022 2.3 Capital The balance sheets of the major subsidiaries increased with the exception of QNET and they continue to exceed their capital requirements throughout FY2023. Cumax Wealth capital adequacy ratio was 33.8% with a risk weighted capital ratio of 43% which compared favourably with the benchmark of 10% set by the Financial Services Commission (FSC). QNET and CSS had capital-to-asset ratios in excess of the benchmark, largely because of their small asset sizes and accumulated deficits. Table 4 sets out the capital ratios for the entities. Table 4: Capital Ratios 2023 vs 2022 3. OPERATING PERFORMANCE 3.1 Income Group Net Income of $1.2 Billion is a 23% increase above 2022 $969 Million. The Group had a consolidated income to assets ratio of 5.8% in 2023 compared to 5.3% in 2022. The Income/Assets ratio for the Subsidiaries were as follows: • JCCUL Corp – 2023, 8.5% to 5.1% in 2022 • Cumax Wealth Management – declined to -3% down from 6% in 2022 • QNET’s Income / Asset ratio for 2023 was 96% as against 77% in 2022 and • CSS ratio was 63% in 2023 compared to 61% in 2022 Table 5: Revenue Income /Assets Ratios of Entities 2023 vs 2022 24
3.1.1 Group Consolidated Earnings The Group’s consolidated earnings of $1.2 billion for 2023 represented an increase of $219 million or 23% when compared to the $969 million earned for 2022. Chart 2 gives a comparative breakdown of the composition of the income for the last three years. In 2023 interest income from investments and loans made up 28% (2022:22% and 2021 5%) of the total income earned, as the Group Treasury Portfolio impacted this revenue starting in April 2022,Fees and Commissions of $479 million have averaged approximately 42% of the Group’s Total Revenues, primarily through the Cumax Wealth subsidiary. Members’ Dues of $295 million have averaged 24% of the Group’s total earnings. Chart 2. 3-Year Group Consolidated Earning Analysis Chart 2. 3-Year Group Consolidated Earning Analysis TREASURER’S REPORT for your ended DECEMBER 31, 2023 25
TREASURER’S REPORT for your ended DECEMBER 31, 2023 3.1.2 The Trade Association/League The Trade Association recorded total net revenue after impairment of $1.42 billion in 2023, compared to $755 million in prior year representing an increase of $667 million or 88%. Major contributors were: • Net Interest Income of $275 million, which was $147 million above prior year. • Non-Interest Income also contributed an improved 66% positive variance: • Income from Members’ Dues of $295 increased by $22.6 million over 2022. • Debit Card Fee Income of $250 million has increased by $105 million or 73% on increased activities of the rebranded AccessPlusMasterCard product. • The League also had fair value gains on its investment properties amounting to $270 million. 3.1.3 Cumax Wealth Management Cumax Wealth income were affected by the volatility of the major equity stock in its portfolio, resulting in heavy fair value losses for the year, losses being $409 million (2022: $27.7 million in fair value losses). Interest income of $210 million is a $3 million increase above FY2022 $207 million. This was however offset by the $288 million (or 47% increase) in interest costs resulting in net interest income returning a loss of $88.4 million declining year-over-year by >100% below FY2022 $9.4 million. Cumax Non-Interest had strong performance on its Fees and Commission, with its $62.8 million improvement. 3.1.4 QNET QNET earned total revenues of $205 million, which represented a decline of $37.9 million or 16% below the $243 million earned in 2022. Switch management continues to be QNET’s major earner, being 45% of total revenues, while income from professional services revenue of $31.8 million, declined year over year by 34%, and has fallen to a 16% net contributor to total revenues. Profit from resales of hardware / software declined year over year by 49%. 3.1.5 CSS This Company recorded gross revenues of $23.9 million (2022: $24.4 million), which was $0.512 million or a 2% decrease below 2022 revenues. CSS revenues (which is drived primarily from management and consultancy services) were relatively stable since the reopening of the economy. 3.2 GROUP OPERATING EXPENSES The Group’s total operating cost of $1.5 billion (2022: $1.24 billion) represented a $268 million or 22% increase in expenses. Staff costs of $689 million (2022: $615 million) is an increase of $73.9 million or 12% and now represents 45% (2022 49%) of total group expenses, impacted by cost-of-living salary increase and recruitment to fill the vacancies brought forward from 2022. Other administrative expenses amounted to $203.3 million (2022: $370.3 million) and representing 13% of total group expenses is a $167 million or 45% decrease. Other notable increases are to cost of debit card services, and legal and professional fees. The composition of the Group’s main operating expenses is set out in Chart 4 below. 26
TREASURER’S REPORT for your ended DECEMBER 31, 2023 Chart 4. Group Consolidated Operating Expense Composition 3.2.1 Trade Association - Operating Expenses The League’s total operating expenses for 2023 of $1.1 billion (2022: $887 million) represented a 26% or $229 million increase with the major cost driver being salaries effected by a job evaluation exercise and recruitment. • Staff cost represents 36.6% of operating costs (2022: 40%) • Cost for Debit card services increased by $32 million or 25% • Other Admin expenses increased by $44 million or 20% 3.2.2 Cumax Wealth - Operating Expenses Cumax Wealth operating expenses amounted to $432 million for 2023, (2022: $421 million) being an increase of $11 million or 3% above prior year 2022. • Staff Costs of $152 million increased by $7 million or 5% and for 2023 represents 35% of operating expenses (2022: 34%). • Legal and professional fees of $37 million were >100% and absorbed accounting & audit fees related to the CIS Funds Audits • Group Accounting Charges of $110 million was also a major recoup of shared expenses charged by JCCUL. 3.2.4 QNET - Operating Expenses Total operating and administrative expenses for 2023 were $216.5 million (2022: $211.8 million) represented an increase of $4.7 million or 2%. The main contributors to the variance were: • Staff costs which increased by $14 million due to cost-of-living increases along with additional hires as the organization increased its capacity to undertake projects and generate revenue; • Professional Services cost of $14.7 million decreased by $6.2 million or 29 % 27
3.2.3 CSS - Expenses CSS’s direct costs of $9.1 million for 2023, (2022: $9.5 million) represented a decrease of $0.388 million or 4% below prior year. Administrative expense of $18.7 million decreased by $0.331 million mainly from staff costs. 4. ACKNOWLEDGEMENTS Let me say thanks to the hard working and dedicated Members of the Boards of Directors and other Volunteers all of whom have contributed their time and skills to improve and sustain the Credit Union Movement. Sincere thanks too to the 25 Credit Unions for their continued and earnest support of the League Group of entities, against the background of a very challenging pandemic environment where several industries struggled. We therefore look forward to Credit Unions’ continued support for the collaborative services offered by the JCCUL Group as we move forward as ONE Movement. On your behalf I would like to thank the Management and Staff of all the Group entities for their tremendous efforts which got us these positive results. Special thanks as well to our auditors BakerTilly. We also make special mention of our other strategic partners and affiliates including Cuna Caribbean, Insurance Jamaica Ltd., Co-operative Insurance Agency and the National Union of Co-operative Societies (NUCS). Special thanks to the Registrar of Co-operatives and Friendly Societies and his staff, who have provided valuable guidance and support during the year. Finally, I would like to thank you all for the opportunity given to me to serve you as Treasurer for this financial year. It has truly been my honour and privilege. Co-operatively Yours Bornette Donaldson - Treasurer TREASURER’S REPORT for your ended DECEMBER 31, 2023 28
Index 31 December 2023 Independent Auditors’ Report to the Registar Financial Statements Consolidated statement of financial position Consolidated statement of surplus or deficit and other comprehensive income Consolidated statement of changes in equity Consolidated statement of cash flows League statement of financial position League statement of surplus or deficit and other comprehnesive income League statement of changes in equity League statement of cash flows Notes on the financial statements 36 37 38 - 42 43 - 44 45 46 47 - 51 52 - 53 54 - 170
36
37
38
39
40
41
42
43
44
45
46
47
48