DBSI's catalytic role

Despite the ei Nino phenomenon which I adversely affected primary production, the

economic and fiscal turbulence which crippled government’s securities mar ket and subsequently induced credit restrain, and the South East Asian contagion which dampened their import demand for Solomon Island export, the Development Bank of the Solomon Islands (DBSI) recorded a

sustained performance in 1997 and continued on to execute its mandated role of development financing in Solomon Islands. During 1997, the Bank received a total of 766 project proposals, worth more than $2O mil lion, for funding consideration from potential entrepreneurs. Of these, 508 or 66 per cent of the total number,

worth more than $l3 million, were considered by the Bank for fund ing; 28 per cent were pending,

awaiting further deliberation; while the remainder were rejected because of absence of credit worthiness, eco nomic and technical viability.

Therefore, the Bank performed as expected against an unfavourable eco nomic environment and recorded a modest credit expansion in 1997. The total number of new loan approvals picked up by 1.2 per cent to 385 while the value of new loan approvals remained stable at $l3 million. The Bank’s sectoral distribution of loan approvals in 1997 was again dominat ed by the services sector in monetary terms and by the agriculture sector in numerical terms. Of the total value of loan approvals, 39 per cent was absorbed by services sector - down 13 per cent over the 1996 level to $4.85 million (ranked third in the number of loan approvals during 1997). The; agri culture sector accounted, for 176 loans, down by eight per cent over the 1996 level and ranked second in the value of loan approvals during 1997.

In numerical terms, the Bank’s com mercial loans grew by 12 per cent to 104, but fell by 36 per cent in mone tary terms over the 1996 level to settle at a trough of $2.98 million. While the number of approvals for industrial loans was only marginal during 1997, their value soared by 262 per cent to $1.52 million in 1997. With these opera tions, the Bank’s lending portfolio has now reached a record crest of $45.84 million at the end of 1997. The Bank’s arrears posi tion, however, worsened in 1997,t0 17 per cent of the total portfolio because of unfavourable economic environment inflicted by exogenous and endogenous economic factors which weakened the profitability and loan performances of DBSI funded projects. However, DBSI is optimistic the economy will recover and, in the long run, would again restore an environment conducive to business in the Solomon Islands. The Bank has recorded, for the seventh consecutive year, a net profit of $106,105 and will continue to play its catalytic role in development financing to fuel economic development in the Solomon Islands. The Bank is also con fident and stands enthusiastic to face the challenges of the future. ■