The Non-Bank Financial Institutions Regulatory Authority (NBFIRA) says the domestic Non-Bank Financial Institutions (NBFIs) were boosted by insurance and lending industries to attain profitability.
NBFIRA – in its 2019 statistical annual report – revealed that the NBFI sector registered an increase in the profit after tax from P1.4 billion in 2018 to P1.7 billion in 2019.
According to NBFIRA, the growth was attributed to the increases in profits of the insurance and lending industries with return on assets increasing from 4.5 percent in 2018 to 5.8 percent in 2019.
“The total assets and liabilities of businesses operating in the NBFI sector, excluding retirement funds and other decreased by 8 percent to P29 billion from P31 billion in 2018 and 14% to P21 billion in 2019 from P24 billion in 2018, respectively,” NBFIRA underscored in statistical report. Capital positions, on the other hand, increased by 11% from P7 billion in the previous review period to P7.5 in 2019.
“Over the past 12 months, the Retirement Funds, Medical Aids and other industries recorded a significant increase in the capital to assets ratio, to 28% in 2019 from 8% recorded in the previous year. The increase is attributable to contraction in the assets levels,” NBFIRA said in the report.
The Life insurance sector generated a total gross with premium of P3.9 billion in 2019 compared to P4.1 billion in 2018 – a 4.9% decline from the prior year.
NBFIRA says Life insurance continues to dominate the insurance sector in the share of assets and gross of written premium, under written during the year ended 31 December 2019.
To that end, the contribution of the insurance sector to the GDP remained higher by regional standards but was unchanged at 3.5 percent with written premiums remain at P5.4 billion. The written premiums income has remained steady for two consecutive years in 2018 and 2019.
“In addition, the total asset base of the insurance sectors (reinsurers and insurers) increased slightly from P19.4 billion in 2018 to P19.4 billion in the year under review. Total assets held by Life insurance companies at the end of the current financial year has increased by 5.8% from P16.2 billion,” NBFIRA added, noting that total liabilities constituted 84% of assets as of 31 March 2020.
NBFIRA‘s Chief Executive Officer (CEO) Oduetse Motshidisi said the outbreak of COVID-19 in the 2019/20 financial year raised concern over financial markets resilience.
“To monitor the situation, the Regulatory Authority, has on March 24, 2020, issued a circular which required retirement funds to submit updates on regular basis so as to facilitate proactive policy response. In addition, licensing guidelines were issued to non-banking lending sector in March 2020,” said former Absa Bank Board Chairman Motshidisi and now the CEO of NBFIRA.