Credit Corporation (Fiji) Limited
Credit Corporation (Fiji) Limited enjoyed another profitable year in 2012 despite extremely challenging local conditions. Net profit before tax of FJD6.50 million (K7.33 million) was returned for the year, a 10.6% decrease on the 2011 figure of FJD7.27 million (K8.20 million).
However, net profit after tax of FJD5.20 million (K5.86 million) was a 9.7% improvement over the prior year’s result of FJD4.74 million (K5.34 million) due to a reduction in the corporate tax rate to 20% in 2012 from 28% the previous year.
Fiji was severely impacted by natural disasters during the year. The damage from two major floods early in the year coupled with damage caused by the impact of Cyclone Evan in late 2012, was disruptive to the operations of the Company and to many of our business borrowers particularly in the west of Fiji. The asset finance market was subject to a heightened level of competition in 2012, with all major commercial banks actively promoting asset finance products. As a result of this market aggression, new business volumes were down 16% from the previous year and the number of new vehicles financed also declined significantly from the previous year. Falling levels of new business volumes coupled with loss of existing business due to refinancing, resulted in a runoff in the level of the finance book. Net finance receivables as at the end of 2012 stood at FJD76.2 million (K85.94 million) as compared to FJD80.4 million (K90.68 million) as at the end of the previous year.
Additional provisioning for bad and doubtful debts was made against the Company’s finance book in 2012, resulting in a higher than normal provisioning charge against profit. We are comfortable that the finance book is adequately provisioned, providing a satisfactory buffer against any deterioration in the credit quality of the book.
Economic growth in Fiji in 2012 was tempered by the impact of natural disasters, however there are positive signs that the economy is gaining momentum, with increasing household and business spending and capital investment. Sectorial performance remains mixed, with cane and sugar production declining in 2012, however a buoyant tourism industry continues to provide a solid backbone for the economy. Interest rates continued to fall during 2012 with strong levels of liquidity available in the Fiji market.
The Government has committed to fund a major program over the coming years to rejuvenate roads and bridges across Fiji and this should present Credit Corporation with good financing opportunities as local contractors gear up for the work. The Company has commissioned construction of a two storey commercial building in Namaka near Nadi. We will see a shift in the Company’s Nadi branch to that site by mid 2013, allowing for more efficient operations and a significant lift in the Company’s profile in the west.
In 2013 the focus will remain on maintaining a high level of customer service to the Company’s valued clients, improving operational efficiency and maximising financial performance. Strong competition is expected to continue in the local asset finance market, however it is to be hoped that business levels