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CU Snapshot

 September '18August '18
# of CUs5,6535,686
Total Assets
($ billions)
Total Savings
($ billions)
Net Cap.
Loans to Savings85.5%84.5%
Loan Delinq.0.7%0.7%

         Credit Union Indicators

Will ‘Brexit' affect CUs' financial outlook?

CUNA economists weighs in on the U.K.'s vote to leave the European Union.

The United Kingdom voted last week to leave the European Union (EU), a decision with economic impact throughout the world. CUNA's economists have issued the following statement in response to the vote, which is referred to as "Brexit":

"Our outlook for credit union financial operations is essentially unchanged compared to our view prior to the Brexit vote. Credit union members are likely to be a bit more cautious initially and some credit unions will likely see above-normal flows into savings accounts.

"However, our view still calls for double-digit growth in credit union loans in 2016, healthy earnings and improving asset quality.

"In the short term, we will see pronounced volatility in U.S. financial markets, and a stronger dollar vis-ŕ-vis the British pound and the Euro, making U.S. goods and services more expensive in those areas. Therefore, the exit of the U.K. from the EU will have a moderately negative effect on the U.S. economy.

"The U.K. is the seventh-largest trading partner of the U.S, accounting for less than 3% of our total trade. However, the rest of the EU represents almost 15% of U.S. trade, and the EU economy is likely to be retarded by uncertainty over the next several quarters.

"As uncertainty in the EU area rises, demand for risk-free financial assets will keep longer-term U.S. interest rates near their unusually low levels for some time.

"[Recently,] the 10-year U.S. Treasury yield declined to 1.5%. We can expect an increase in financial inflows into the U.S. as a result of uncertainties in the Euro area.

"The strong initial market reactions will likely be reversed as investors get a better handle of the implications of Brexit, and plans on U.K.'s disassociation with the E.U. becomes concrete, which will take about two years."