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The Fiji Development Bank expects its role as a development banker will not overshadow its need to survive.
FDB chief executive officer Ratu Deve Toganivalu told Fiji Live it was important that the bank, as a government-owned entity, continued to support the nation’s development.
“For commercial banks, I’d say that achieving their bottom line would be one of the main things. It’s the same for FDB, but not as much as a commercial bank would do. We’d like to have a little bit of bottom line, we want to be sustainable but the key thing is development.
“We are here as government’s arm to prop the economic development of the nation. And we are owned by the government. So we’ve managed so far to survive as an organization, we’ve taken care of ourselves pretty well since our inception and I think we’re heading into a bright future with a lot of development work in store,” Toganivalu said when asked how FDB fared when having to balance its development role and survival, a dilemma that development banks worldwide are increasingly facing.
“But then again, we don’t want to jeopardize our fighting for development and jeopardize our bottom line. We must make sure that we’re sustainable that we can operate, financially viable,” he added.
But maintaining a role as a development banker does have its price, as FDB would be seen to service loans that commercial banks would not normally touch.
“I’ve heard a lot of complaints about banks asking for too much deposit and they need a lot of security, these are high risk loans.”
“But we need to help people out in the rural, “ he said.
Toganivalu gave an example of a $2000 loan to improve a farm, which would cost the FDB $1000 to service.
“I give $2000 and try to manage that account for $1000 a year, which would be the cost of me running there, supervising and trying to collect. And then a hurricane happens and all the crops are gone, where will they get their return from?
“Those are the small things that people don’t realize why there are certain pre-requisites that we want met before we lend. So if the hurricane hit the farmer and crops are not harvested, he’s stuck with the loan, and the bank is left with the debt,” Toganivalu said.
The FDB, he said, avoids being caught in its high risk ventures by following a prudent balancing ratio in accordance with its corporate plan.
In its latest annual report, FDB’s loan portolio sees most of its funds lent to the real estate sector (27.4 percent), private individuals (14.8 percent), wholesale/retail/restaurant (14.3 percent) and Building/Construction (14.1 percent).
