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By RACHNA LAL and
The profitability in Fiji’s banking sector is at the low end of the Pacific region, says Pacific Financial Technical Centre and the International Monetary Fund’s, John Vaught.
“In other words, the regional average bank profitability is much higher than what Fiji records,” Mr Vaught said.
He was speaking at a symposium on ‘Banking and Finance in Fiji: Fostering Growth and Development’ at the University of the South Pacific (USP) Laucala campus on Monday.
The symposium was jointly-organised by the Griffith University, Oceania Development Network and USP’s Faculty of Business and Economics, School of Accounting and Finance.
Mr Vaught said, while Fiji might be at the lower end of bank profitability in the region, it has one of the highest returns on foreign exchange.
“You can’t just look at the return on asset figure. You have to look at composition and in Fiji’s case a third of this profitability is from foreign exchange profits.”
“It’s not all from commercial banking from loan and deposits activity.”
Mr Vaught said: “Not all other banking jurisdictions had such large profits coming from foreign exchange, or at least we could not find any.
“So that kind of increases the return of asset for the industry here.”
However, despite this, Mr Vaught believes Fijian banks are quite good.
“They make money which we want and they have weathered the financial crisis very well and they have high loan ratios and are serving the community well,” he noted.