HFC Bank working with auditors to understand the real risk and provisioning required for doubtful debts

The CEO of HFC Bank, Rakesh Ram says they are working with their auditors to understand the real risk for only Fiji owned commercial bank and the real level of provisioning required for bad debts as 65 to 70% of their customers have been provided with loan deferments.

Ram says they are well aware there will be a severe level of provisioning required for doubtful debt. 

He says deferments are deemed high risk if they pass the 90 days period.

Ram says 60% of their business customers are mostly made up of small businesses while 40%of their personal customers who have taken home and personal loans have mostly lost jobs or are on reduced hours.

HFC Bank recorded an after-tax profit of $18.2 million for the financial year ending June 2019 and according to Ram, they were looking at just over $20 million after-tax profit for the financial year ending June 2020.

However, according to HFC’s CEO, more than 50% of the profit will go towards provisioning for bad debts.

The Fiji National Provident Fund owns 75% of HFC Bank while Unit Trust of Fiji has 25 per cent shares.

Ram says their returns to FNPF over the years have been over 10% but there may be a dip this year.

He says FNPF is a supportive shareholder and they have demonstrated this earlier this year by injecting some capital in HFC Bank.