UNEVEN domestic economic recovery has been evident since 2008, the Reserve Bank of Fiji pointed out in its 2011 annual report.
This, as credit expansion failed to return to double digit growth that was recorded in 2008, the report, released last week, said.
"Banking data for the year suggest persistent subdued demand in the manufacturing, building and construction, professional and business services and public enterprise sector," the bank said.
However, the banking industry expanded by a further 9.7 per cent to $4.9 billion in 2011 marking a significant improvement against a relatively sluggish 1.4 per cent growth in 2010 and an average increase of 7.3 per cent in the last five years.
The report said investment in government and government guaranteed securities increased by 2.4 per cent to $255.6 million last year.
The banking industry's capital and reserves level dropped by 13.4 per cent to $495 million because of the reduction of $126 million in unappropriated profits, the report said.
"The reduction in unappropriated profits was mainly due to repatriation of profits to commercial banks' head offices and transfer of reserves," the RBF report said.
The capital adequacy ratio for the banking industry remained strong at 15.5 per cent — above the minimum requirement of 12.0 per cent, the report said. "This however, reflected a deterioration of 3.4 per cent when compared to 18.9 per cent per cent registered in 2010," the report said.
The decline in capital adequacy was owed in part to profit remittances, the report said.
Total past due levels increased significantly to $47 million with the private individuals sector dominating the problem loans for the industry at 30.3 per cent, followed by the wholesale, retail, hotels and restaurants sector at 17.8 per cent.
Rise in operating and bad debts expenses during the year contributed to the marginal drop of profitability of the banking industry in the 2010-2011 financial year, the report said.