swatini Development Finance Corporation’s (FINCORP) subsidiary, FIRST FINANCE, has put around E911.2 million into the pockets of emaSwati during the financial year which ended in March 2021.
According to FINCORP’s 2020/21 annual report, this huge amount represents loans held by employees from both the public and private sectors. However, this financial year’s loan portfolio is somehow down by 3.6 per cent compared to the previous year’s E945.2 million. The drop is attributed to the COVID-19 scourge, which has negatively affected most businesses across the globe. “Some companies restructured their processes, which resulted in the retrenchment of some clients. Other entities reduced employees’ salaries leading to the inability for some to meet their loan repayment obligations,” reads the annual report.
Of the E911.2 million loan portfolios, E459.7 million was disbursed under the Manzini branch while a sum of E347.9 million was distributed under the Mbabane division. At least E103.6 million was dispatched from the Nhlangano branch. The report further states that FIRST FINANCE is experiencing a phenomenal demand for loans hence from time-to-time it was experiencing liquidity pressure. “Increasingly, new entities are showing interest in securing the services of the company to avail loans to their employees,” the report states. To meet the growing demand, the financial institution put in place a strategic plan (2018- 2022) to attain a E1.2 billion loan portfolio. However, owing to the suppressed operating environment in the last one and a half years, FIRST FINANCE may not meet the target.
Despite this fact, ‘the organisation shall embark on an intensive product offering review to stimulate portfolio growth.’ Notwithstanding the highlighted challenges, overall, the FINCORP subsidiary recorded a fairly good performance during the year under review. “When the pandemic struck at the beginning of the year 2020, many organisations were only operating on selected days per week and FIRST FINANCE was no exception,” highlighted the report.
The organisation is also said to have achieved decent financial sustainability by recording profit before tax of E63.1 million and E52.3 million after tax. The report further highlighted that the company continued with the implementation of its strategic plan aimed at increasing the loan portfolio. In 2018, FIRST FINANCE focused on its service delivery processes to improve the customer experience at all branch outlets. Among other things, FIRST FINANCE implemented one key strategic objective, which was automating the loan application and onboarding process. This facilitated the real-time retrieval of information for returning applicants. This platform also enabled FIRST FINANCE to get periodic statistical data on loan applicants.
Looking into the future, the report says the company should maintain decent financial results. “However, the escalating cost of funds from funders remains a major challenge as it reduces the interest margin for the organisation,” the report further indicates.
Original story on Times of Swaziland