Credit Corporation (Fiji) Limited
Fiji operations had an excellent year, earning a record operating profit before tax of F$6.77 million (PGK9.57 million), a 12% increase on the 2009 result of F$6.02 million (PGK8.51 million). This is considered a very good result given the sluggish economic conditions that prevailed during the year.
Operating profit after tax of F$4.93 million (PGK6.97 million) is also a record being an 18% increase on the 2009 profit of F$4.17 million (PGK5.89 million).
The profit was earned under challenging economic conditions with minimal growth and a slow Fiji economy. Within this, tourism numbers were at record levels, with gold, bottled water and remittances all making significant contributions. The sugar industry that supports an estimated 20% of the community continued its difficulties and foreign investment remained depressed. Aid remained at low levels as traditional donors continue to hold back on programs until they are satisfied there is an acceptable timetable for a return to democratic rule. The Government has confirmed elections will be held in 2014. This is seen as positive, and the first step towards a return to democracy.
Trading conditions were often difficult during the year with very aggressive competition for new business that saw pressure on our margins as both lending and interest bearing deposit rates were under pressure. Because of the lower yields, new business increased by 27% over 2009 levels to maintain profitability. There was strong liquidity in the domestic financial markets, and although interest rates remained at high levels during 2010, there are now signs that show rates are easing.
During 2010 we encountered severe poaching of experienced marketing staff by competitors. We have been able to cover all vacancies including the appointment of a new General Manager Lending who has settled in well. We were not able to proceed with the purchase of the land identified in Nadi for an office building due to town planning restrictions and we are now looking for an alternative site. The Lautoka office was relocated to give more exposure to the public and a new office in Nakasi was also opened.
During 2011, we will continue to focus on improving the performance of the Company to maximise profitability and shareholder wealth. However with the Fiji economy forecast to remain slow and with continuing increased competitor activity, we expect difficult operating conditions to remain during 2011.
Ross McDonald
Fiji
