Credit unions saw the overall interim profit of these firms rise by 12.2% to £12.8m in the first quarter of the year, “driven by increases in England and Scotland, as falls in total income were offset by even greater falls in total expenditure in both regions,” Bank of England data shows.    

The membership of these member-owned financial institutions lifted to 2.16 million, up 0.33% in the first three months of the year.

The total value of assets held by these firms, some of which provide mortgages, “rebounded slightly” in the period, increasing 0.14% to £4.89bn, the central banks adds, after the first quarterly fall since records began in the final quarter of last year.

Overall, the income of these firms fell by 13% to £99.6m, and expenditure fell by 15.8% to £86.8m quarter-on-quarter. 

Broadstone senior director of risk Paul Matthews says: “Credit unions continued to build members and assets through the first quarter of the year, capitalising on the gap left on one side of the consumer credit market by a tightening of mainstream lending criteria and on the other from borrowers turning away from traditional banks. 

“Demand for borrowing remains high given the financial pressures that many households face, which is another key growth driver for the credit union market and is expected to remain elevated as we head into winter. 

Matthews adds: “Credit unions can offer members a more personalised service with greater flexibility in underwriting, which can be more accommodating for borrowers with limited credit history or irregular incomes. 

“However, credit unions will need to ensure that this growth is controlled and measured with well-understood risk and the appropriate levels of customer care.” 

There are 366 credit unions in the UK, according to House of Commons library data last month.