Credit Corporation (Vanuatu) Limited

"The Vanuatu economy is gradually recovering from the devastating affects of Cyclone Pam in early 2015. Despite various challenges in 2016, the company returned a sound operating profit of VT 47.7 million for the year up 35% from the prior year’s result of VT 35.3 million."

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Credit Corporation (Vanuatu) Limited

  Johnny Wilson
Managing Director

The Vanuatu economy is gradually recovering from the devastating affects of Cyclone Pam in early 2015. Despite various challenges in 2016, the company returned a sound operating profit of VT 47.7 million for the year up 35% from the prior year’s result of VT 35.3 million.

After a slow first half, new finance written for 2016 totalled VT 598 million, comfortably in excess of budget and 73.5% up on the 2015 total figure of VT344.7 million. The strong growth in the finance book was very pleasing and came on the back of increased lending to the transport sector in particular as the economy continued to stage a recovery.

2016 saw a more focused team marketing effort, including a number of sales awareness programs and joint visits with motor dealers to rural centres. 2016 was a year of strong growth in the company’s lending following on from 2015 where the opportunity had been taken to clean up the company’s impaired assets which had resulted from the general economic downturn brought on by Cyclone Pam.

The company’s finance book is considered to be comfortably provisioned at a level equating to 6.4% of the total gross finance book as at 31 December 2016, and in compliance with the Reserve Bank of Vanuatu’s prudential requirement.

 

The company remains in a strong financial position, with total assets of VT 751.4 million and shareholder’s funds of VT478.1 million as at 31 December 2016. Capital adequacy ratio was an extremely healthy 67.6% as at year end. Tourism industry is the biggest income contributor to the Vanuatu economy but the industry was severely affected during Cyclone Pam and the El-Nino dry spell in 2015. Three major international hotels in Vanuatu were under full renovation for 12 long months and did not re-open for business until mid 2016. With many small local businesses vitally dependent on tourism, those 12 months of closed doors affected many businesses including restaurants, bars, tour operators, taxis and buses.

The main Bauerfield Airport runway at Port Vila was deemed unfit to take certain international flights, with Virgin and Air New Zealand cancelling crucial flights into Vanuatu over an extended period which compounded the negative impact on tourism.El Nino induced drought conditions left many rural communities with insufficient water and as a result it affected the agriculture sector, reducing export
quantities.

However on the positive side, reconstruction and infrastructure projects funded by the Vanuatu Government and its donor partners are finally underway and will continue into 2017. It’s a huge relief for the economy and the citizens in general. According to ADB projections, a GDP forecast of 3.8% for 2017 will be driven by increased cruise tourism, the improving agriculture sector and major reconstruction and infrastructure projects. As such, 2017 is shaping to be a promising year for the company and increased finance opportunities are expected to align with these growth projections.

Johnny Wilson
Managing Director


Credit Corporation Vanuatu staff.