No Change to Bank Interest Rates

There have been no changes to interest rates for banks in Fiji, after recent monetary policy decisions taken by the Reserve Bank of Fiji, including reducing the Statutory Reserve Deposit rates of banks from 6% to 5% of their deposit and similar liabilities.

This is evident from the interest rates published by the country's two largest banks, Australia and New Zealand Banking Group Limited and Westpac Banking Corporation in recent days which we have posted on our blog earlier today.

This would mean that interest spreads, the difference between average lending rates and average deposit rates or cost of funds of a bank, would still be high or at least have not changed much.

In recent weeks, the Reserve Bank of Fiji had issued policy directions to banks one of which was to reduce their interest spreads to 4% in three months time.

While retail customers, the ordinary bank customers including Moms and Pops, would have no change to their rates, wholesale customers have the advantage of enjoying higher rates. Wholesale term deposit rates for 1 year terms are still around 8% or 9%, however, there is some downward pressure on them.

For advice on investment or portfolio management, pls call our office on (679) 3342719 or email info@gilbert.com.fj.

ANZ Interest Rates (updated 28.4.08)

Schedule of interest rates released by ANZ Fiji are as follows:

• Business Index Rate - 11.25%;
• Residential Property Loan : Standard Variable Rate - 10.50%, 1 Year Fixed Rate - 9.00%;
• Investment Loan : Standard Variable Rate - 10.50%, 1 Year Fixed Rate - 9.00%;
• Personal Loans : Secured - 12.50%, Unsecured - 15.20%;
• Small Loans : Unsecured - 20.00%;
• Retail Term Deposits: 9 months to 1 year - 2.25%, 1 to 1.5 Years - 3.50%, 1.5 to 2 Years - 3.75%, 2 Years to 3 Years - 4.00%.

Interest rates are on a per annum basis and may be varied by ANZ without prior notice.

Westpac Interest Rates (updated 1.5.09)

Schedule of interest rates released by Westpac Fiji are as follows:

• Business Lending Rate (effective 20.4.09) - 10.99%;
• Residential Property Loan (effective 20.4.09) : Variable Rate – 10.50%, 1 year Fixed Rate – 8.50%;
• Investment Loan (effective 20.4.09) : Variable Rate - 10.50%, 1 year Fixed Rate - 8.50%;
• Retail Term Deposits (effective 30.3.09) : 6 to less than 9 months - 2.25%, 9 months to less than 1 year - 3.00%, 1 year to less than 1.5 Years - 3.50%, 1.5 years to less than 2 Years - 3.75%, 2 years to less than 3 Years - 4.00%.

Interest rates are on a per annum basis and may be varied by the bank without prior notice.

Individuals and groups that need investment advice, or advice with regard to capital markets issues, can use our company, Gilbert & Samuels Company Limited. We also do strategic planning, business continuity planning and capacity assessment consultancies. Also contact us if you require investment portfolio management services.

Our contacts are: telephones (679) 3342719, (679) 3544897 or e-mail: info@gilbert.com.fj.

Fiji Ratings Downgraded by Standard and Poors

Fiji's ratings by Standard & Poors have been downgraded with effect from 15 April 2009. The revised ratings are as follows :

• Credit Rating (Foreign Currency), Rating B-/Negative/C;
• Rating of the US$150 million foreign debt 6.875% maturing on 13 September 2011, B-.

The foreign credit rating was reduced from 'B/B' rated in February 2009. The Standard & Poors definitions of ratings are provided at the end of this post.

The downgrade would mean that accessing debt financing from abroad would be more expensive for the Fiji Government and Fiji based businesses. Given that banking system liquidity has been quite tight in recent months, there was an option for businesses to access debt from abroad.

Also, aside from having to pay higher interest for the higher perceived risk, Fiji based businesses would also have to contend with paying more in Fiji dollar terms after the 20% devaluation by the Reserve Bank of Fiji yesterday, 15 April 2009.

Import prices might also be expected to rise as foreign based merchants and businesses price in the higher risk of default after consideration of the latest S&P ratings and those by similar agencies.

The higher prices of imports will again be passed onto ordinary consumers and households in the form of higher prices of products and services.

For advice, pls contact our office on 3342719 or email info@gilbert.com.fj.


Standard & Poors definitions :

• ISSUE CREDIT RATING DEFINITIONS - A Standard & Poor's issue credit rating is a current opinion of the creditworthiness of an obligor with respect to a specific financial obligation, a specific class of financial obligations, or a specific financial program (including ratings on medium-term note programs and commercial paper programs). It takes into consideration the creditworthiness of guarantors, insurers, or other forms of credit enhancement on the obligation and takes into account the currency in which the obligation is denominated. The opinion evaluates the obligor's capacity and willingness to meet its financial commitments as they come due, and may assess terms, such as collateral security and subordination, which could affect ultimate payment in the event of default. The issue credit rating is not a recommendation to purchase, sell, or hold a financial obligation, inasmuch as it does not comment as to market price or suitability for a particular investor.
  Rating of B - An obligation rated 'B' is more vulnerable to nonpayment than obligations rated 'BB', but the obligor currently has the capacity to meet its financial commitment on the obligation. Adverse business, financial, or economic conditions will likely impair the obligor's capacity or willingness to meet its financial commitment on the obligation.

• ISSUER CREDIT RATING DEFINITIONS - A Standard & Poor's issuer credit rating is a current opinion of an obligor's overall financial capacity (its creditworthiness) to pay its financial obligations. This opinion focuses on the obligor's capacity and willingness to meet its financial commitments as they come due. It does not apply to any specific financial obligation, as it does not take into account the nature of and provisions of the obligation, its standing in bankruptcy or liquidation, statutory preferences, or the legality and enforceability of the obligation. In addition, it does not take into account the creditworthiness of the guarantors, insurers, or other forms of credit enhancement on the obligation. The issuer credit rating is not a recommendation to purchase, sell, or hold a financial obligation issued by an obligor, as it does not comment on market price or suitability for a particular investor.
  Rating of B - An obligor rated 'B' is more vulnerable than the obligors rated 'BB', but the obligor currently has the capacity to meet its financial commitments. Adverse business, financial, or economic conditions will likely impair the obligor's capacity or willingness to meet its financial commitments.

• RATING OUTLOOK DEFINITIONS - A Standard & Poor's rating outlook assesses the potential direction of a long-term credit rating over the intermediate term (typically six months to two years). In determining a rating outlook, consideration is given to any changes in the economic and/or fundamental business conditions. An outlook is not necessarily a precursor of a rating change or future CreditWatch action.
  Positive means that a rating may be raised.
  Negative means that a rating may be lowered.
  Stable means that a rating is not likely to change.
  Developing means a rating may be raised or lowered."

Reserve Bank of Fiji places ceiling on interest rates and interest spreads

The Reserve Bank of Fiji today imposed a ceiling on lending rates of banks and other lending institutions (including the Fiji National Provident Fund). The ceiling imposed on each institution is the weighted average lending rate of that particular institution as at 31 December 2008.

Additionally, the Reserve Bank of Fiji has also taken the major action of putting a ceiling on interest spreads, which (depending on the definition used) I would understand to be the difference between an institution's weighted average lending rate and it's weighted average cost of funds (i.e. the average rate it pays for customers' deposits placed with it).

The high interest spreads of banks and lending institutions in Fiji has been the subject of much contention by consumers of banking services over the years, with the two large foreign owned banks each making over F$30 million per year in recent years. It is understood that the interest spreads/margins of banks in Fiji are much higher than what they are in most developed economies.

The move to contain lending rates and spreads has not usually been undertaken in recent years by other countries, particularly those with central banks that use open market operations to influence interest rates like Fiji. However, it would seem appropriate for Fiji at this time, given our present circumstances.

Another good move taken by the Reserve Bank of Fiji would see an emphasis on building micro finance lending by banks and financial institutions in Fiji. As a result of the global/local crisis, more and more people would be displaced from jobs. Upskilling and training them to run their own small businesses would help them fend for themselves.

PS : The Reserve Bank of Fiji today announced that it has a new Governor, Mr Sada Reddy, who was Deputy Governor up to last week. Read about it in other media.

For advice, pls call our office on (679) 3342719 or email info@gilbert.com.fj.

Fiji Dollar Devalued

The Reserve Bank of Fiji has devalued the Fiji Dollar by 20%. The devaluation takes immediate effect today, 15 April 2009.

The devaluation has been done to contain Fiji's falling foreign reserves as well as the impact of recent developments on the economy. Additionally, further restrictions on exchange controls have been put in place.

In simple terms, the devaluation would mean that more Fiji dollars are needed to purchase imports and exporters get more Fiji dollars when they export goods and services. This makes imports more expensive while exporters earn more local currency.

Devaluations are meant to discourage imports and to encourage exports, a reason for which is to assist maintain or boost our country's foreign reserves.

Given that things in or from Fiji will be cheaper to overseas buyers, it should help encourage more purchases of our goods and services from foreign buyers, including tourism.

However, for locals, cost of living would be expected to rise in the short/medium term as a direct result of the devaluation as prices of goods, particularly imported ones, rise. One outcome of this may see people putting pressure on employers to raise their salaries. However, raising salaries and wages would be a real challenge for employers given the current state of the economy, its performance, and the high costs of doing business.

PS : Note our post on the impact of the new ceiling on lending rates which were announced today by the Reserve Bank of Fiji.

For investment and business advice, please call our office on (679) 3342719 or email info@gilbert.com.fj.

Invest in Fiji Blog Readership : March 2009 vs February 2009

We provide you with statistics on our blog readership. Here are the readership statistics for our Promoting Suva blog for the months of February and March 2009. Data for February is given first followed by data for March.

February 2009

• total number of visits - 415;
• total number of page views - 612;
• top 15 countries of origin of readers and no of visits per country - Fiji, 185; Australia, 60; United States, 37; United Kingdom, 21; New Zealand, 17; India, 11; Canada, 9, Ivory Coast, 8; Thailand, 8; Nigeria, 6; Ghana, 4; Spain, 3; Papua New Guinea, 3; Switzerland, 3; Poland, 3;
• top 10 referring source - google / organic, 330; (direct) / (none), 35; yahoo / organic, 16; blogger.com / referral, 5; ftib.org.fj / referral, 4; promotingsuva.blogspot.com / referral, 4; rizwandean.blogspot.com / referral, 4; search / organic, 4; ask / organic, 2;
  monetynews.pl / referral, 2;
• top 20 keywords used in searches - invest in fiji, 10; bruno gillier, 5; business in fiji, 5; investinfiji, 4; email contact directors 2009 @yahoo.com.fj, 3; investment in fiji, 3; "joes farm" & fiji, 2; +679 email 0f business, 2; +679 email contact addresses of companies in fiji, 2; deposit interest rates, fiji, 2; email fiji islands trade and investment bureau, 2; fiji, 2; fijian holdings unit trust, 2; foana nemani, 2; info@gilbert.com.fj, 2; investing in fiji, 2; rate of interest fiji, 2; starting a business in fiji, 2; westpac fiji interest rates, 2; "@ .fj" + tel: +679 + ceo + 2009, 1;

March 2009

• total number of visits - 636;
• total number of page views - 1,010;
• top 15 countries of origin of readers and no of visits per country - Fiji, 342; United States, 76; Australia, 69; New Zealand, 22; India, 17; Canada, 15; United Kingdom, 14; France, 10; Malaysia, 6; South Africa, 5; United Arab Emirates, 5; Philippines, 5; Ivory Coast, 4; Burkina Faso, 4; Germany, 3;
• top 10 referring source - google / organic, 514; (direct) / (none), 37; blogger.com / referral, 22; yahoo / organic, 20; rizwandean.blogspot.com / referral, 6; msn / organic, 5; promotingsuva.blogspot.com / referral, 5; search / organic, 4; ask / organic, 3; google.com / referral, 3;
• top 20 keywords used in searches - invest in fiji, 13; investinfiji, 6; bruno gillier, 5; gilbert veisamasama, 5; global financial crisis in fiji, 5; invest in fiji blog, 5; business in fiji, 4; fiji islands invest, 4; gillier group, 4; buisnesses for sale in fiji, 3; colonial national bank fiji, 3; global financial crisis-fiji, 3; investment in fiji, 3; anz term deposits, 2; association of banks in fiji, 2; business for sale in fiji, 2; effect of global financial crisis on fiji, 2; effects of global financial crisis in fiji, 2; effects of recession on holiday inn suva, 2; fiji credit crisis, 2;
  

Observations

• Readership of the blog again grew in March 2009 compared to the month earlier;
• Readers from Fiji, USA, Australia, New Zealand, India and Canada form our largest readership group. Readers from these countries can best be targeted for marketing from this blog;
• Our top referring site continues to be google.com. This indicates our good visibility on google searches.
• Keyword searches indicate that readers are searching for a issues relating to investing in Fiji. Interestingly there is an increase in searches on the impact of the global financial crisis on Fiji.

Companies can utilise our wide readership base and high search rankings to market and advertise their products.

For advertising to our wide readership base, check our advertising rates here. If you wish to discuss how we you can advertise your products and services on our blog, e-mail us on info@gilbert.com.fj.