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.
Thursday 02 January 2020 | 14:24
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.
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“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
