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Credit Corp Posts K22m Profit

by PNG Business News - March 19, 2021

After reporting a Core Operating Profit of K25.66 million for the 2020 financial year, Credit Corporation PNG has posted a net profit of K22 million.

Credit Corporation CEO Peter Aitsi released the 2020 results, saying it represents the complexities of the COVID-19 pandemic during the year, as well as the group's determination to actively support PNG's SME business through these initiatives.

Higher impairment charges as a result of a drop in economic activity across the Pacific and internationally have had a major effect on earnings.

Despite the challenges of FY20, the group's balance sheet remained solid.

The group's liquidity position improved by 64% to K230 million, funding rose by 3%, and the loan-to-deposit ratio improved to 92 per cent.

The company is well-capitalized, with a liquidity and financing matrix that far exceeds regulatory requirements.

The overall risk-weighted capital ratio rose to 32.6 per cent during this period.

Due to the conservative approach to lending in the current climate, gross loan receivables (net of unearned interest) decreased by K54 million in 2020.

Although stressed exposures as a percentage of gross loans increased, the group took a cautious approach by raising impairment provisions from K64 million to K119 million.

In June 2020, the board announced a final dividend of 12 toea per share for 2019. This equated to a 7.1 per cent dividend yield.

Given the economic uncertainty, the board agreed not to pay an interim dividend for the 2020 fiscal year.

Aitsi said the challenges posed by the COVID-19 pandemic from the start of the second quarter to the end of the financial year had placed the company in an unprecedented position.

“2020 has been an abnormal and unprecedented reporting period for us and for many others,” he said. “During the period, governments of countries where the group operates focused on preventive measures to keep people safe.

Although essential, these restrictive measures led significantly to a decline in business activity.

“Our immediate focus was to ensure the wellbeing of our people and our customers in addition to doing what we could to assist our customers experiencing financial challenges as a result of the COVID-19 situation,” he said. “I am proud of how we all pulled together to deliver service to our customers, and our businesses remained operational throughout this situation. We continue to make positive changes within the group to refocus on our core businesses and key markets, and to improve the group’s performance.”

As the global and local economies recover, the group remains focused on maintaining a healthy balance sheet that offers a solid foundation for taking full advantage of growth opportunities.

Importantly, with the economy projected to grow slightly in 2021, Credit Corporation is well-positioned to continue to serve customers and recover from the uncertainties of 2020.

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