Credit Corp profit soars to K86mil

CREDIT Corporation Group’s core profit has increased by 14 per cent to K86 million, reflecting a stable performance of the underlying business.
During the year, the board declared an interim dividend of six toea per share, representing a 50 increase on the previous corresponding period.
In keeping with previous practice, the board is expected to declare a final dividend after its meeting in June 2019.
Credit Corporation has now delivered a dividend to shareholders for 40 consecutive years.
Despite challenging economic conditions in a number of key markets, the group achieved growth in its loan book within the finance division, along with improved occupancy driving enhanced rental income in the property division.
Credit Corporation chief executive officer Peter Aitsi said the past six months had been a time of delivering results and also a time of review.
“We have focused on driving performance across the business, which is evident in the growth in the loan book within our finance division and improved occupancy, enhancing rental income in the property division – the Group has concurrently reflected on its business strategy,” he said.
“This is particularly important, given the changing dynamics of the consumer and business finance sector across the Pacific and the growing expectations of our customers.”
Credit Corporation accounts for interests in associates and joint ventures using the equity accounting method.
Due to a time lag between the date of Credit Corporation reporting requirements and those of investee company Capital Insurance Group, directors have taken a prudent approach in their consideration of the investee’s impairment indicators.
As such, directors have decided to adopt a K2.99 million impairment charge on this interest until there is greater visibility of the investee’s financial position.
If the actual outcomes for the investee, based on its audited accounts, are significantly different from projections, there may be a reversal of this impairment loss.
The full year result was also impacted by a significant K18.6 million increase in loan provision expense to K25.3 million. The increase was attributed to the adoption of IFRS 9, provisioning for legacy loans and the general increase as a result of growth in loan book.
“The board took the prudent decision to adopt a full impairment charge in relation to its legacy portfolio,” Aisi said.
“This, in addition to other initiatives, will enable management to focus on driving business results which deliver shareholder value.
“The Group’s focus is on best practice in terms of accounting standards and asset quality.
“We expect the systems being put in place will greatly assist our recovery measures in 2019.”
Chairman Syd Yates said the Group’s 40 years in business provided a wealth of experience to deliver financial services its customers required throughout the South Pacific.
“In celebrating this important milestone for the Group, we must acknowledge the strong values and culture within the Group, which will drive Credit Corporation’s success and sustainability into the future,” he said.
“These latest results are the outcome of the board and management’s focus on strong business performance and on delivering enhanced shareholder value.”