Company compliant with new system
MERCHANT Finance Ltd will be one of the first financial institutions in the country to be compliant with International Financial Reporting Standards 9 and 16.
This was according to the MFL chief executive officer Rowena Fong in their 2018 annual report.
“IFRS 16 relates to leases and specifics how MFL will recognise measure present and disclose leases it holds,” she said.
“While IFRS 9 specifics how MFL recognises a financial asset or liability in its statement of financial position when it becomes party to the contractual provisions of the instrument.”
According to Ms Fong MFL has worked on the adoption of these new standards throughout the past financial year in order to properly understand the standards as well as the impact on the institute’s profit and loss statement with the balance sheet.
The damaging weather patterns had also made an impact on the financial institute, as according to Ms Fong, Cyclone Josie and Keni as well as the floods in the Western Division had affected their customers especially in the agricultural industry.
She said the institute’s significant progress recording a profit before tax of $8.5 million compared with $4.9m in 2017 was because of a significant decrease in loan impairment expense which was from $6.4m in 2017 to $2.2m in 2018.
“The focus of the FY18 year was to improve our loan book with the establishment of our Asset Management Unit which proved to significantly improve our collection throughout the financial year,” stated Ms Fong.
“Interest income decreased slightly by 4.2 per cent compared with the same period last year while interest expense also decreased by 2.7 per cent resulting in 4.7 per cent decrease in net interest income.”
It was also revealed the total assets was maintained at $165m, with their cash and cash equivalents weakening by 15.4 per cent from $5.2m to $4.4m in 2018.
MFL’s loan portfolio for the year ended with a satisfactory improvement of 2.3 per cent of $133.6m compared with the previous year.
“There was a slight decrease in our term deposits which was sufficient for our lending purposes over the financial year. Our dividends to shareholders grew with a total of $5.0m from $4.5m the previous year an increase of 11 per cent.”