Financial system sound

Business, Normal

The National, Thursday 06th of March, 2014

Bank of PNG’s inancial system in the country is sound with assets worth K21.9 billion at the end of September last year, it said in a publication.
The monthly economic review said that of the figure, the banking sector accounted for 77%, superannuation system 21.8% and life insurance 1.2%.
Aggregate loans amounted to K11.3 billion.
The non-performing loan portfolio as a proportion of total loans was 1.9% and as a share of total assets was 0.8%.
The capital adequacy ratio (CAR) for the banking system was 28.1%, well above the minimum requirement of 12%.
And the return on assets was 2.6% with the return on equity 21.8%.
BPNG stressed the country’s economy last year continued to grow at a moderate pace, lower than the strong growth experienced in 2012.
Level of gross foreign exchange reserves as of Jan 31, 2013 was US$2.8 billion (K6.7 billion).
While lower international commodity prices and the winding down of the construction phase of the liquefied natural gas (LNG) project were contributing to the easing in economic growth, growth in the non-mineral private sector activity, supported by increased growth in credit extended by commercial banks and increased Government expenditure, had contributed to sustaining the growth.
Aware of potential inflationary pressures, the bank said it was taking a cautious approach by maintaining its neutral stance on monetary policy.
The policy signalling rate, the kina facility rate (KFR), was kept at 6.25% for the past two months this year.
BPNG said this stance was also to support economic growth as the construction phase of the LNG project wound down.