Savings in Irish credit unions grew by 14.5 per cent last year to €12.6 billion, figures released yesterday show.

In its annual report, the Irish League of Credit Unions (ILCU), the all-island umbrella body to which 530 credit unions are affiliated, said it had three million members - more than half of the population - as of the end of December, with average savings per member of €4,200.

The league also said its members had 150,000 Special Savings Incentive Accounts (SSIAs) between them - equal to about €1.8 billion or 13 per cent of all the money saved through the scheme.

These accounts, which give a guaranteed 25 per cent return on the savings, start to mature this month.

Loans to individual members increased by 7 per cent during the year to stand at €7.1 billion at the end of December. In the Republic, the average size of a loan was €7,600, compared with €4,340 in the North.

"This is substantial growth and it's growth all around, which gives us great hope for the future," said Liam O'Dwyer, ILCU's chief executive.

Speaking at the launch, Taoiseach Bertie Ahern welcomed the growth in the business, saying that the strong numbers represented confidence in the network.

"Membership figures of three million give you the highest penetration level in the world," he said. "And savings of €12.6 billion bear testament to the huge value those many members place on the co-operative ethos that guides that movement."

However, while the rate of growth is positive, it lags behind that of other financial institutions, a fate the league attributes to regulatory restrictions. Mr O'Dwyer said legislation dating back to 1997 prevents credit unions from having more than 20 per cent of their loans for longer than a five-year period and more than 10 per cent for 10 years.

"This is outdated legislation, which is restricting our growth by forcing us to turn members away," said Mr O'Dwyer, adding that the league was in talks with the Department of Finance about amending the legislation.

"This is about enabling the credit union movement to develop," he said. "We need changes to the legislation to enable that growth and development."

As the legislation stands, the ILCU is unable to provide mortgages and other types of larger loans that need to be paid back over longer periods of time on a large scale. The average mortgage in the Republic lasts for 25 years. Some credit unions have recently worked their way round the restrictions by announcing plans to offer mortgages in conjunction with other lenders.

While the average size of a credit union loan stands at about €7,500, it does provide much more substantial loans and Mr O'Dwyer said demand for larger amounts had been increasing.

"The market has developed and we're not able to grow with it even though we have the money," he said.

The outcome of the talks with the Government should be known within the next two months and the ILCU will be hoping it follows the lead taken in the North, where the legislation was recently amended. "The Government recognises the services that the credit union provides and they want to see us grow and develop," said Mr O'Dwyer.

ECCU Assurance Company, a subsidiary of ILCU that provides life products exclusively to credit unions, generated a profit of €10.5 million last year and will return the total amount to member credit unions.

Unlike products from other institutions, a loan from the credit union automatically comes with life insurance at no extra cost to the borrower.

Total assets grew by 15.4 per cent to €14.26 billion during the year.