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Commercial Lending For FNPF Increased Last Year

The Fiji National Provident Fund (FNPF) commercial lending portfolio closed at $854.1 million (after impairment) in 2019, compared with $686.3 mil­lion 2018.
02 Jan 2020 14:24
Commercial Lending For FNPF Increased Last Year

The Fiji National Provident Fund (FNPF) commercial lending portfolio closed at $854.1 million (after impairment) in 2019, compared with $686.3 mil­lion 2018.

This equates to a 24.4 per cent in­crease in portfolio.

According to the FNPF 2019 annu­al report, it stated: “The growth is a result of new lending to various entities such as Vodafone Fiji, Lo­tus Garments, Air Pacific Limited (trading as Fiji Airways) and Fiji Sugar Corporation.

“Total interest income for the year was $38.4m compared with $26.7m in 2018, a growth of 44 per cent.

“During the year, the portfolio adopted the Expected Credit Loss model of booking for impairment in compliance with International Financial Reporting Standard (IFRS 9).

“This was a change from Interna­tional Accounting Standards 39 un­der which impairment allowances were measured according to an “incurred” loss model and recogni­tion of credit loss was triggered by events subsequent to origination.

“In contrast, the IFRS 9 impair­ment model requires impairment allowances for all exposures from the time a loan is originated, based on the deterioration of credit risk since initial recognition.”

Reduced liquidity

The 2019 financial year was re­warding for the Fund.

“Reduced liquidity in the finan­cial system enabled the Fund’s earning capacity and provided op­portunities of investment whilst there was upward pressure on interest rates. This had a positive imapct as majority of the Fund’s portfolio is interest rate–sensitive.

“Besides providing liquidity to the financial system of Fiji, the FNPF continued with its strategy implementation of venturing into growth assets investments, helping diversify the investment portfolio and maximise returns at the same time.

“The market interest rates were on a rise mainly due to tightening liquidity levels,” the report stated.

As at June 2019, liquidity in the banking system stood at $434m against $470.2m for June 2018.

The Fund’s cash balance as at June 2019 was $459.5m compared with $481.8m last financial year.

The decline is attributed to the Fund’s heavy investment activity.

Feedback: maraia.vula@fijisun.com.fj

 

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