PNG Bank boosts net profit but faces lending challenges in Fiji
The Pacific Islands’ most significant homegrown financial institution, the Papua New Guinea headquartered Bank South Pacific (BSP), has announced an increase of 26 per cent after tax net profit (K356 million) for 2011 over the previous year.<!--more-->
Commenting on the bank’s latest annual results, chairman Kostas Constantinou said, “Whilst that performance has been driven by that economy’s very strong growth in the 2011 fiscal year, it has been achieved under some challenging circumstances.” He attributed the economic growth mainly to Asian demand for the country’s natural resources.
BSP’s national share of loans and advances in PNG is now 51.4 per cent while its deposits share stands at 51.84 per cent, according to the latest report released this week.
The bank has operations in several Pacific Island nations, particularly throughout Melanesia and in PNG, Fiji and the Solomon Islands it runs some 70 community-oriented projects delivered by bank staff as part of its community service programme.
But the bank faces lending challenges because of directives issued by Fiji’s Reserve Bank. The country’s central financial institution in February this year that stipulates of Fiji stipulated banks to lend at least 6 per cent of their deposits to the agriculture and renewable energy sectors. It gave the banks 12 months to comply.
This amounts to some $48million that BSP must lend to the two sectors, according to BSP country manager in Fiji, Kevin McCarthy. “It's a strong challenge,” Mr McCarthy told the Fiji Times. “It's not a growth in numbers, for BSP this means $33million for agriculture and $15million for renewable energy and we have to give this out in a year.”
The bank plans to appoint an agriculture business development manager to help scale its lending in the agribusiness sector.