Subscribe to Fiji Sale - Lists Properties on Mortgagee Sale in Fiji
Powered by groups.yahoo.com

This blog is brought to you by Gilbert & Samuels Company Limited, a financial advisory services and consulting company based in Suva, Fiji.
To contact the authors of this blog, please call telephones (679) 3342719, (679) 3544897 or e-mail info@gilbert.com.fj.


Tuesday, May 26, 2009

ANZ Interest Rates (updated 26.5.09)

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.

Labels: , , , ,

Thursday, May 21, 2009

Impact of recent policy decisions in Fiji

Recent policy decisions taken in Fiji have had implications which have taken place in a very short time.

A decision to retire civil servants at 55 years of age has resulted in a severe shortage of school teachers in Fiji schools as Term 2 of the school year began on Tuesday, 19 May 2009. Read here a story by Elenoa Baselala.

Earlier this week, it was reported that of the government personnel sent home upon reaching 55 years of age, about 200 are to be recruited again into the civil service as reported in the Fiji Times on Tuesday, 19 May 2009. This re-engagement of retired civil servants will add onto government costs as they will have to be insured at higher premiums, might have to be paid at a higher salary than what they were receiving when they were retired, and all this after they would have taken their funds from Fiji National Provident Fund. Most workers who continue working after 55 years of age, often choose to leave their funds there until such time they are effectively retired from employment.

After doctors and nurses have been sent home early on reaching 55 years, Government is now looking at recruiting doctors from India. The move will contribute to increased costs to Government as it pays high salaries and benefits package, in addition to relocation costs as it attempts to attract those doctors.

Last week, I had analysed that the Reserve Bank of Fiji's recent policy decisions will presumably see banks and financial institutions working to raise their non-interest income streams which would ultimately mean that banks will be paying more and higher bank charges. This is because the recent policy announcement by the Reserve Bank has only concentrated on containing interest rates and spreads. Banks and financial institutions might therefore not lose out at all as they make their money/profits from non-interest income streams. Read my posts on this blog last week.

The recent devaluation has not had a desired effect on the tourism industry in Fiji. Tourism Fiji, the former Fiji Visitors Bureau has reportedly said that they have not seen an increase in numbers of tourists as had been expected after Fiji devalued its dollar by 20% a month ago. There are, therefore, other factors that come into play. Are they linked to the political environment or are they more linked to the effect of the global crisis on people's purses as they suffer the fallout from global recession and higher costs of living?

Over recent weeks, most merchants in Fiji have some way or another benefited from the devaluation. Some have used the opportunity to raise their prices of goods at ridiculous levels. For instance, a Gillett Mach 3 Turbo 4-blade pack, which I would buy at around F$17.00, had risen to almost $25.00 with the reason given by the cashier, and with a smile, as "it's the devaluation". The Consumer Council of Fiji would really need to do a survey of some of these shops soon.

As Fiji works on attracting more foreign investment, one of the things that will need to be worked on is to ensure at all times that investors interests are adequately protected as they participate in commerce. If there are some issues with laws on a broader scale, research has shown that at an entity level, companies should at least attempt and put in place adequate safeguards to protect their interests of shareholders and owners. This serves as an attraction before an investor would decide to invest in business in a particular country.

Almost all our efforts in recent years and months have been focused on promoting more sports without much emphasis on other areas where our children could be exposed to help build their future. Read an earlier post I did on this on my other blog here.

In the meantime, Government has reduced the age where people are allowed to drink liquor from 21 to 18. In this environment, when things are looked at in totality, what are we promoting? Is it alcoholism at an early age? Read here.

When one analyses some of these policy decisions, it is difficult to see any coherent flow of policy ideology in some of these decisions. Policy makers will stand back and review some of these policies again or those that are still in the works before they introduce them to ensure coherence.

Labels: , , , ,

Monday, May 18, 2009

Fuel prices rise and increased costs of doing business in Fiji

Fuel prices rise again from today, Monday, 18 May 2009.

The increases are a result of increases in the international product price of fuel and also the recent devaluation of the Fiji dollar.

Prices outside Viti Levu will vary depending on cartage and freight charges to individual islands.

The increase in product prices brought about by the recent devaluation of the Fiji dollar will contribute to increased costs of doing business in Fiji which may also see an increased in business failures as costs spiral out of control for businesses.

So far Government has not announced any special concessions or benefits that can be tapped by small or micro business enterprises during these hard times.

It is expected that reduction in interest rates as intended by the Reserve Bank of Fiji's recent monetary policy announcements will benefit this sector.

Last weekend, ANZ has announced a reduction in its variable lending rates by 0.5% effective from 1 June 2009. The regulator hopes that all other banks will follow suit and announce reductions in their lending rates.

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

We also provide consulting services covering strategic and corporate planning, business continuity planning, capacity assessments and on any issue relating to the financial sector.

Labels: , , , , ,

Saturday, May 16, 2009

ANZ reduces variable lending rates

ANZ Banking Group Limited is the first bank to announce a reduction of 0.5% in all its variable rate loans as from 1 June 2009.

The announcement was made by the bank's Fiji General Manager, Robert Bell.

The bank said the reduction was a result of an increase in banking system liquidity due to improvement in export proceeds collections and the reduction in the statutory reserve deposit requirements of commercial banks.

ANZ has also said that its wholesale term deposit rates are to fall as well.

The bank has urged customers facing financial difficulties to contact their ANZ branch or relationship manager to discuss their positions, as soon as possible.

One should be expecting other banks to follow suit in reducing their interest rates after the announcement by ANZ.

Labels: , , , , ,

Thursday, May 14, 2009

Will customers pay higher bank fees under new RBF policy?

The Reserve Bank of Fiji had announced around mid April 2009 that it was capping banks and financial institutions weighted average lending rates to the level at which those rates were for each financial institution at end December 2008.

It also announced that it was placing a ceiling on the interest spreads of the same institutions to a limit of 4%. Read our earlier post on the Reserve Bank of Fiji's new policy here.

What does that mean?

While banks and financial institutions struggle with the new requirements, from which customers should greatly benefit from, particularly when interest spreads with some banks might be around 8% or so, this would mean that banks will desperately look at either increasing revenue from other non-traditional sources, such as fees and commissions, or cutting down their overheads, including closing branches and sending some of their staff home.

Banks and financial institutions might now all be looking at ways to increase their non-interest income, through raising of fees, charging of new fees, etc. It is interesting to note that the Reserve Bank's policy announcement in April 2009, did not mention anything on controlling non-interest income, particularly fees income and commissions, of banks and financial institutions.

So, customers? Expect some increase in your bank charges over the next few months.

As for overheads, banks and financial institutions would be all out to reduce their overheads as a direct result of the new banking and financial institutions requirements. This would see the cutting down of some services in some areas, closing of certain non-profitable branches and agencies, and termination of staff.

Again, you would be able to see these over the next few months.

Note : For investment advice and portfolio management services, pls call our office on telephone (679) 3342719 or (679) 3544897.

Labels: , , , , , ,

Friday, May 08, 2009

Interest Rates starting to trend downwards?

Treasury Bills (TBs) interest rates have started to trend downwards in figures disseminated by the Reserve Bank of Fiji today.

28 day TB rates fell from 5.79% issued on 8 April 2009 to 5.70% on its issuance on 6 May 2009. 91 day TB rates, similarly fell from 7.35% to 7.30% on those dates.

Banking system liquidity (measured by bank demand deposits held at the Reserve Bank of Fiji) rose to F$119.6 million at end 7 May 2009, from F$105.2 million a week earlier.

Given that TB rates have started to decline and given the rise in banking system liquidity which one hopes will be sustained, one can assume that commercial bank deposit rates should start to fall,. That ultimately should contribute to a fall in commercial bank lending rates.

As lending rates fall, the other challenge is to find projects/avenues where the available funds can be directed to be utilised for purposes that can generate production, exports and employment.

Check my other post here for suggestions on what can be done further.

Labels: , , , , ,

Banking System Liquidity Improved Slightly - What can be done further?

Banking system liquidity in Fiji has improved slightly to around F$105 million at end April 2009.

This came after the Reserve Bank of Fiji's actions to reduce the deposit requirement that banks are to hold with the Reserve Bank to 5% from 6%. The Bank had also devalued the Fiji dollar exchange rate by 20% three weeks ago.


What can be done further to stimulate the economy?

The Reserve Bank of Fiji's actions have in the past been generally appropriate for Fiji.

Around 2006, to dampen growth in the property loans market and with intentions to promote lending for investment purposes, the Reserve Bank had put in a requirement that lending for housing mortgages be limited, particularly for those customers that already own a home/property.

They also reviewed all bank lending applications to ensure that lending was indeed directed towards investment related purposes.

What can be done now to encourage money to move around the economy and stimulate growth, is for lending by banks and credit providers to be encouraged again. However, as in the past, lending has to be for purposes that generate economic growth e.g. those that will generate production, more exports, and increased employment. Lending for residential property development and buying second home can still be restricted. (This particular market got very inflated a few years ago in Fiji, particularly in the Suva and Nadi areas.)

Should banks now work on developing mortgage securitisation products (having learnt lessons from the US banks' sub prime mortgage lending debacle) and be able to transfer out some of the loans that exist in their books, to free up their capital and liquidity for further lending? I am quite sure there will be interest locally and around the Pacific Islands region for buying mortgaged backed securities from Fiji. The regulator and potential investors, though, have to be up-to-date with the actual risks and how these securities are to be valued - these were both weaknesses in US regulators, banks and investors prior to the financial crisis of 2007/2008.

With more and more people are being displaced from their employment as a result of the global/local crisis, there would also be a need for an alternative livelihoods project (like that which had been done in the agricultural/sugar cane sector in the past) where such people are provided training on new skills to be able to generate income e.g. setting up and running small businesses.

The Small and Micro enterprise sector has been found to be one of those that can contribute well to the development of an economy, anywhere around the world.

In Fiji, people who wish to run businesses have a primary need to understand the basic principles of running a business, how not to mix business with their personal affairs, the rudiments of an accounting and recording system, how to raise capital and prepare the background papers for it, how to prepare budgets and monitor compliance with them, how to prepare business/corporate/strategic plans and to stick with them (including regularly review them to ensure that they are adequate for the changing environment in which they operate), etc.

More and more people are entering the job market with qualifications but there are not many jobs available. Yet, curricula in schools and tertiary institutions do not provide anything on entrepreneurial training like they do in Singapore, for instance.

Can we export some of our qualified personal but provide incentives for them not to entirely migrate to overseas countries where they will provide their services, but to still find it a benefit to remain a Fiji citizen/resident?

The development of a national human resource development plan should be able to identify these things.

These are some of my thoughts that can be developed further.

Note : For investment advice and investment portfolio management services, call our office on (679) 3342719, (679) 3544897 or email info@gilbert.com.fj. We also do consultancies in areas relating to the financial sector in Fiji and can conduct or assist with similar consultancies in the Pacific Islands region. Our other products include :
  • strategic/corporate planning;
  • business continuity planning; and
  • capacity assessments.

Labels: , , , , , , , ,

US Bank Stress Tests and Implications on Fiji banks and potential investors

The largest 19 banks in the US have been subject to stress tests by the regulators there over the past few weeks.

The tests have been the outcome of the continuing impact of the financial crisis that has started from the US and has now spread to the other parts of the world.

Over the recent months, a large number of banks in the US have failed from inadequate provisions made for loans that have continued to default from the large mix of hybrid lending products and loan securitisation that had grown rapidly in those banks since the mid 1990s.

Here are some of the comments that have been raised regarding those stress tests. And here are some leaked results.

The impact that these tests have on us here is that there will be an opportunity to invest or buy into those banks that have need for additional capital.

Also our local banks can see as to the financial status and performance of their correspondent banks overseas, particularly if they are dealing directly with some of the 19 largest banks that have been subjected to the stress tests.

Thirdly, those that have no need for additional capital would show everyone that they have had good systems and controls in place prior and now during the financial crisis promoting confidence in them and indirectly in the financial sector, not only in the US but around the world as well. [Since the onset of the global financial crisis, there has been much criticism as to the role played by the financial sector and regulatory authorities.]

Those banks that will need additional capital will require closer scrutiny to see whether the faults are attributed to their own mismanagement or lax decision making or are a direct result of other wider financial sector issues.

Note : If you need investment advice or portfolio management services, do call our office on (679) 3342719 or email info@gilbert.com.fj. We also carry out consultancies on areas relating to the financial sector in Fiji and can also conduct or assist with similar work in the Pacific Islands region.

Labels: , , ,

Tuesday, May 05, 2009

Colonial National Bank Interest Rates (Updated 5.5.09)

Schedule of interest rates released by Colonial National Bank are as follows:
  • Business Banking Base Rate – 9.20%;
  • Residential Property Loan : Variable Rate – 9.50%, 1 Year Fixed Rate – 7.50%;
  • Investment Loan : Variable Rate – 9.50%, 1 Year Fixed Rate – 7.50%;
  • Retail Term Deposits: 9 months - 3.00%, 1 year - 3.50%, 1.5 Years - 3.75%, 2 Years - 4.00%, 3 Years - 4.50%.

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 and investment portfolio management services, can use our company, Gilbert & Samuels Company Limited.

We also do strategic planning, business continuity planning and capacity assessment consultancies. Our contacts are: telephones (679) 3342719, (679) 3544897 or e-mail: info@gilbert.com.fj.

Labels: , , , ,

Friday, May 01, 2009

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.

Labels: , , , , ,

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.

Labels: , , , ,

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.

Labels: , , , ,