Credit Corporation (SI) Limited reported yet another profitable year in 2015, earning an operating profit before tax of SBD11.13 million (K4.12 million), slightly down by 3.42% compared to 2014 result of SBD11.52 million (K4.26 million) and below budget by 25%.
This result was achieved despite some challenges experienced during the year.
Net Operating Income was up by 5.94% to SBD8.64 million (K3.20 million) compared to 2014 and par with budget. This is driven by increase loans written during 2015 which increased by 52% to $76 million compared to 2014. But despite this growth the increased level of loan provision (both General & Specific) which absorbed 21.69% of our NOI has influenced both our operating profit result and budget. We are gradually making positive progress in addressing this trend.
Total dividend declared and paid in 2015 was SBD5.75 million (K2.13 million). This is a well rewarding return for our shareholders in PNG.
Total operating expenditures is tracking well within the acceptable level, below budget by 8% and slightly increased by 11.63% -due to inflationary factors- to SBD3.8 million (K1.41 million) compared to 2014. Cost to income ratio (exclusive of loan provision) stood at 19.63%.
In terms of industry classification against our loan book, Transport sector continues to dominate the same holding 33%; followed by Distributions, 18%; Forestry, 10%; Construction, 8% and remaining 14 sectors make up 31% respectively. The overall quality of our loan portfolio is satisfactory and balance sheet remains active.
The level of public confidence in our business is strong. This is evident from increasing volume of investors placing deposits on our Interest Bearing Term Deposit product. The total investment portfolio has increased by 11% to SBD98 million (K38 million) in 2015. The maturity profile for investments is well spread and aligns well with our loan maturity profile.
The level of liquidity floating in the financial system continues to be high resulting in the declining deposit rates in the local market and total credit to private sector continues to fluctuate around SBD2 billion (K773 million) throughout the year (source: CBSI). We continue to place high focus on Risk and Compliance (Credit, Operation & Governance) issues within our business hence
our operation is fully compliant with Internal, Statutory and Regulatory requirements throughout the years as evident from external and internal audit satisfactory outcomes. Furthermore, the board has appointed Mr Adrian Wickham in October 2015 as non-executive member for CCSI. Mr Wickham has over 30 years experience in the private sector holding various directorship roles with various private sectors and State Own Enterprises in Solomon Islands. He is currently serving as the Managing Director of Soltuna Limited. Mr Wickham comes from Munda, Western Province.
On the domestic economy front, the following commodities continue to dominate the country’s export market; Copra, Fish, Logs, Timber and Palm Oil with Logs continue to be the number one foreign exchange earner for Solomon Islands (source: CBSI). The country’s Gross Domestic Product is projected at circa 3% in 2016 and Inflation rate rebounded from minus 4% during second quarter of 2015 to 2.9% in the last quarter of 2015 and expects to gradually lessen over the ensuing periods (source: CBSI). The country’s foreign reserves throughout the year were running above SBD3 billion (K1.159 million) which equates to 10 months import cover (source: CBSI).
To maintain our position as a responsible corporate citizen we continue to avail funds through donations and sponsorships to various selected sports and charitable organisations throughout the year. The end results of our contributions towards community service participation have been very positive.
Going forward, we forecast a 5% growth in our business in 2016 which we believe is reasonable and achievable considering the current economic environment. We have achieved the level of growth we anticipate to date taking into full consideration of the level of existing resources we maintain and the size of our operation.
Credit Corporation is well positioned to continue deliver attractive and competitive financial services to individuals and businesses in Solomon Islands, which we have proved since our inception in Solomon Islands 11 years ago.
All is well; we anticipate another profitable year in 2016.
Tony B. Langston