A total of 400,000 loans to the value €2.5 billion were issued by ILCU-affiliated credit unions in the last year, the Irish League of Credit Union's latest Financial Highlights show.
It represented the highest level of annual lending in 10 years, the League claims.
As of the end of June, the collective loan book for ILCU-affiliated members stood at €5.1 billion, which is up 40% over the last 10 years.
"Credit unions have continued to increase their market leading share to over 40% of the unsecured personal loan market," the ILCU said in its financial highlights statement.
Total assets held by the more than 270 credit unions that make up membership of the League stood at €17.9 billion at the end of June.
The ILCU said total assets had more than doubled in the last two decades.
Membership has also continued to grow with 3.2 million members in the Republic.
"It is increasing steadily at a rate of 1,000 new members per week," the League said in its statement.
The typical credit union loan is issued for household improvement, home retrofit, car purchase, weddings and to cover medical costs.
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However, some members have diversified into mortgages in recent years offering rates which the ILCU describes as 'very competitive' and 'lower than their banking counterparts'.
"Our mortgage activity is up 41% year on year and public demand for mortgages from credit unions is going from strength to strength," David Malone, CEO of the ILCU told Morning Ireland.
"The mortgage market is highly concentrated with 90% of it held by the three pillar banks. We're seeing significant shifting to the credit unions because they offer rates as low as 2.95%, some in the 3% category and more in the 4% category," he explained.
ILCU-affiliated credit unions have total member deposits of €17 billion which they 'recycle' out to members in new lending.
The credit unions operate slightly differently to the main banks in that they pay a dividend to shareholders for their savings rather than paying interest.
The banks have come under pressure to increase the rates that they pay depositors for their cash and have been responding with higher rate offerings in recent weeks.
Asked if member credit unions would increase dividends to reflect the higher cost of money now, David Malone said it was up to individual member outlets.
"We've maintained our loan rates because we want to maintain sustainable finance, but certainly each credit union will consider at the end of the financial year in September in terms of whether they will pay a dividend and that's a decision for each credit union, but they will be factoring in their services as well," he said.
Several credit unions restricted the level of deposits that they would take from individual members during the era of negative interest rates which ended in July of last year when the ECB started out on its current interest rate hiking cycle.
Mr Malone confirmed that some credit unions still have the lending caps in place, but would be reviewing them in the context of the changed interest rate environment and the performance of the investment markets.
He also pointed to the regulatory capital requirements imposed on the sector.
"At the moment, a credit union has to set aside 10% of savings lodged from a regulatory capital requirement. That's something that we're continuing to engage constructively on with the Central Bank," he said.
He also welcomed the imminent review of lending limits by the Central Bank of Ireland.
"While opportunities exist to improve consumer outcomes via lower cost mortgages there are regulatory limits that reduce the ability of credit unions to provide much needed competition in the market," he explained.
Mr Malone said the upcoming legislation would enable the sector to build on its foundations and unlock further potential within the sector.
