fast growth

Banks on fast growth

RECENT bank reports from the region indicate that sector continues to grow at a faster rate than general economic development, and that lending and deposits show a steady upward trend.

The Bank of Kiribati, which is 51 per cent owned by Westpac and 49 per cent by the Kiribati government, reported another good year. The bank lost a SA6 million trustee investment which was transferred to a specialist superannuation manager in Australia, but general deposits increased by $3.3 million. The bank, in line with its charter to increase credit within Kiribati, expanded its loans portfolio by 71 per cent to $4.02 million.

The bank’s 1988 report commented that much of the increased lending had been for personal, rather than essential housing, purposes and in the following year lending policies might need to be analysed in an attempt to direct money into developments more in line with the gov-

ernment’s economic policy.

The bank had opened a branch on Kiritimati Island and at the end of the year deposits there totalled $531,000 which was more than 50 per cent higher than the bank had predicted in its plan ning. Most of the business at the branch was new to the bank and had not been just transferred from the head office on Tarawa. Its opening meant that only Au stralian dollars were now being used on the island which, the report said, was a major contribution to the economic de velopment of the country.

The Bank of Kiribati made a profit after tax of $553,620 and had total assets of $32 million.

The Bank of South Pacific reported another good year in Papua New Guinea, with after-tax profits of K 2.12 million (compared with K 1.34 million the year before) to September 30, 1988.

Income was up 25.4 per cent, while de posits and loans grew by 12 per cent and 18 per cent respectively. Deposits grew with a large increase in mineral activity more than counterbalancing the fall-off in the agricultural sector.

In its comment on the general econo mic outlook, the bank’s report said it

continued to support the government’s desire to promote a competitive financial sector as one of the most effective ways to achieve the goal of sustained long term growth for Papua New Guinea.

The bank believed the financial sector would remain strong. But the report warned that, while Papua New Guinea had a wealth of resources which should ensure long-term prosperity, the country must control the temptation to generate short-term benefits.

The latest available report for the Bank of Western Samoa, to December 31 1987, shows a 23 per cent increase in deposits for the year. After-tax profit almost doubled to SWSI.B7 million.

There was a large increase in interna tional business, most of it in the form of remittances, but the bank commented on Western Samoa’s widening trade gap, caused mainly through a decline in ex ports, and voiced concern about the trend. In 1987 the trade gap reached $lO6 million, compared with $Bl.BB mil lion the previous year. This gap widened

despite a slight improvement in export

prices, especially for coconut oil, and the growing number of tourist visiting the country. □