Revolving Loan Fund reports record profits, loan increases ahead of restructuring

Government’s Student Revolving Loan Fund (SRLF), which is set to be restructured next year, is reporting improved operations and record profits over the past year.

Chief Executive Officer Ambrose Johnson reported that the SRLF continues to improve its operations with the objective of making it “a viable and sustainable entity”, and in the last financial year, returned “a remarkable financial and operational performance”.

According to the report in which independent auditors declared the SRLF “buoyant and fully functional”, as of the year ended March 31, 2023, net profit was $9.67 million which was an increase of 45 per cent over the previous year.

“While the SRLF has consistently generated net profits, the net profit for this financial year is the highest on record,” reported Johnson. “The remarkable level of net income generated in the financial year 2023 can be attributed mainly to the consistent management of the SRLF’s arrears portfolio.”

The CEO explained that had resulted in a considerable number of loans being reclassified either as being current or in a lower risk category. That translated into a $7.36 million reduction in the loan loss provision which led to the record profits.

However, he cautioned: “Although the SRLF is expected to remain profitable in the foreseeable future, it cannot sustain this level of profitability and is projecting to generate profits in the range of $1 million to $4 million per year in the future.”

In the notes attached to the financial statements prepared by chartered professional accountants Baker Tilly, it was disclosed that a reorganisation of the SRFL is set to be executed in the coming financial year.

“It is anticipated that the organisation will undergo a restructuring process during FY2024. This was based on recommendations of an organisational assessment conducted by Deloitte. The SRLF has already circulated the restructuring proposal to all the regulatory bodies, received feedback, and the requisite amendments [have] been completed,” the report stated.

The report noted that despite the many challenges experienced during the financial year which ended in March, the Fund, which has been providing student loans to Barbadians for over 45 years, remained “buoyant and fully functional with many staff working on a flexi-time schedule”.

Johnson disclosed that loans approved over the last year have surpassed pre-COVID-19 levels.

He noted that after the significant reduction in loan approvals during the COVID-19 period, growth in loan approvals started to show signs of improvement from the previous financial year. However, the CEO noted, “the number and value of loans approved by the SRLF have now, for the first time, surpassed the pre-pandemic levels”.

For the last financial year, a total of 494 loans were approved, compared to 270 from the previous year, this was an 83 per cent increase. The value of approved loans moved from $8.20 million in 2022 to $15.75 million in 2023 an increase of $7.55 million or a 92 per cent increase.

Johnson attributed those sharp increases to improvements in the global economy, an aggressive advertising campaign by the SRLF, a greater focus on its customer service as well as the introduction of a new loan product during the financial year.

The SRLF was requested to facilitate the government’s Cyber Nations Training Initiative, the focus of which is to train 1 500 Barbadians in cyber security with a key component of the programme being the provision of jobs for those individuals who successfully complete the programme. Of the 494 loans approved for the year 2023, 120 were cyber security loans with a value of $1.91 million.

New loan offerings are expected in the coming year, according to the report.

“During FY2023, the Fund continued to offer several acommodations to borrowers, ranging from deferral of payments, suspension of interest, suspension of late payment fees and reduced payment fees, and reduced payments. It is anticipated that the SRLF will continue this practice during FY2024,” it added.
(BT)