I have blogged earlier about the Reserve Bank of Fiji's (RBF) current monetary policy settings over the last two years which has seen banks having a good time making astronomical profits.
Another trend observed was that during the interest rates hikes by the RBF, banks used the opportunity to widen interest spreads further. Refer to latest Quarterly Review issued by the RBF for December 2007, page 25. As I said earlier, it is little wonder then that banks have recorded dramatic increases in profits for their most recent financial year.
Businesses, foreign investors and individuals have been complaining of high interest rates, in addition to the complaints they already have about high banks' fees and charges.
The environment of high interest rates will contribute to an increased number of failures of small businesses as they face pressures of the rising costs of meeting repayments of business loans.
It will also see Fiji as a less attractive destination for foreign investors who are turned away by the high costs of borrowing and for doing business. Foreign investors are really people that the country needs with their expertise and technology transfer abilities and experience.
These are sectors that the Interim Government has clearly stated in the Revised National Budget 2007 that it wishes to encourage.
Read here (note registration on the website is required) the story being taken up by Fiji TV in its One National News tonight.
I again reiterate a call that I earlier made that there needs to be an independent analysis of the profitability of banks, their components of income, how these have fared over the period 2005 and 2006 (during RBF's interest rates) and particularly how interest margins and spreads have moved. A study of individual banks' figures should be done and submitted to Government's Ministry of Finance for the necessary policy decisions to be taken.
No comments:
Post a Comment