Credit unions across Saskatchewan and British Columbia saw earnings improve in 2025 as easing interest rates lowered funding costs and helped restore profitability after weaker results in 2023 and 2024.
BNN Bloomberg spoke with Josh Veenkamp, assistant vice-president of North American financial institution ratings at Morningstar DBRS, about improving margins, stronger wealth-management income and ongoing risks tied to credit quality and residential development markets.
Key Takeaways
- Saskatchewan credit unions posted steady earnings growth in 2025, while British Columbia credit unions recorded a sharper recovery following weaker 2023 and 2024 results.
- Lower funding costs helped improve net interest margins across the sector, supporting stronger profitability.
- Wealth-management income increased alongside strong equity markets, contributing to higher non-interest revenue for credit unions.
- Innovation Credit Union maintained higher margins through out-of-province lending strategies, though those loans also contributed to credit-quality deterioration.
- Credit unions see growth opportunities in Canada’s midsize banking market as consolidation reduces competition from regional lenders.
Read the full transcript below:
ROGER: Credit unions across Saskatchewan and B.C. have rebounded last year after interest rates eased off their 2023 peak. For more on what’s driving the turnaround, Josh Veenkamp, assistant vice-president of North American financial institution ratings at Morningstar, joins us in studio. Always a pleasure to have people in studio. Thanks very much for joining us, Josh.
JOSH: Thanks for having me.
ROGER: Okay, so what’s been leading the turnaround? What? Where’s the drive coming from?
JOSH: For sure. So just for a very quick context, at Morningstar DBRS, we rate the three largest credit unions in Saskatchewan and the three largest in B.C. So we now have 2025 results for all six of them, and we’ve seen continued steady growth in Saskatchewan and in B.C., really a meaningful recovery in earnings coming off a weak 2023 and 2024, and really the driver is the same across the board. So margins are improving on lower funding costs, and then we’re also seeing higher non-interest income, which is largely wealth-management income, on the back of strong equity markets.
ROGER: And which of them were showing the strongest bounce back?
JOSH: So B.C. is really the one bouncing back. Saskatchewan, you know, they didn’t see the same downturn in earnings. So they’ve been more steady.
ROGER: More steady. And within the credit unions themselves?
JOSH: Yeah. So, you know, it varies. Saskatchewan, again, they’ve all been pretty steady. So in B.C., you know, the two that have rebounded that saw the biggest hit in the past couple of years were Tru, formerly known as First West Credit Union, and then also Vancity and Coast Capital. The third one, they’ve been hit less on that side, and so there’s less recovery to be seen there.
ROGER: It is very much a Western thing, isn’t it? The credit unions. How do they compare to the banks? And yes, kind of in general, and what’s the appeal out there to them?
JOSH: Yeah, certainly, they have larger market shares out there. I think, you know, you see that as maybe historically, because the banks started in the East, and they didn’t make their way there as quickly, so the credit unions had time to grow there. Certainly compared with the big banks, the credit unions are much, much smaller. They wouldn’t offer the same breadth of products. The credit unions largely don’t play in the capital-markets space the big banks do. But I think we’re really seeing the credit unions seeing an opportunity in kind of the midsize banking space, just because you’ve seen some of those players swallowed up by the big guys. So Canadian Western, acquired by National, HSBC Canada, acquired by RBC. Now we’re seeing Laurentian going to Fairstone. So a lot of those middle, midsize players have disappeared. And so the credit unions see kind of an opportunity there.
ROGER: And they’re all private, right? They’re all private companies. Are any of them publicly traded?
JOSH: The credit unions? No. They’re all privately held.
ROGER: And within them, Innovation Credit Union, which is Saskatchewan, it had a flat net interest margin year over year. Any clear reasons for that?
JOSH: Yeah. So Innovation Credit Union, as you mentioned, they have had consistent earnings year over year, and they were already at the high end of peers, high end of margins, for sure. And that’s largely been driven by kind of this growth strategy they have. A number of years ago, they kind of decided to expand outside of the province to boost earnings, to diversify the loan portfolio. And so kind of those loans, which are coming from third parties and in other provinces, are higher yielding. So they’ve had higher returns. But on the flip side, we’ve seen some credit deterioration at that credit union as well.
ROGER: And with the other credit unions, any concerns or strong points for them that stand out within the individual ones?
JOSH: Really have been a broadly similar story across them. Like I said, you know, this recovery in margin in B.C. and then kind of just a steady growth in Saskatchewan.
ROGER: And where do you see them heading over the next year?
JOSH: Yeah. So earnings-wise, you know, we see revenue growth continuing kind of on the same trends, margins recovering, and then as well maybe some higher non-interest income from wealth. But we also do see headwinds in the space, certainly. You know, there’s this lingering macroeconomic uncertainty, you know, geopolitical tensions maybe driving inflation. And then also really in the condo, the residential development space, there’s certainly weakness there, so keeping an eye on that.
ROGER: Okay, we got to wrap it up there, Josh. But thank you very much for joining us.
JOSH: Thank you very much.
ROGER: Josh Veenkamp, assistant vice-president of North American financial institution ratings at Morningstar DBRS.
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This BNN Bloomberg summary and transcript of the May 14, 2026 interview with Josh Veenkamp are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
