Difficult market conditions have hit Enterprise Growth Fund Ltd (EGFL) resulting in increased loan delinquency and significantly reduced profits.
For the year ended December 31, 2012, net comprehensive income amounted to $707 752, down from $1.6 million in the previous year.
And according to chief executive officer Timothy Simmons, delinquency increased from about 12 per cent to around 20 per cent over the period.
“Our clients are feeling the stress . . . . because their clients are not paying them on time and they, too, are not paying us on time,” he said during a media briefing at EGFL’s Barbarees Hill, St Michael offices last Thursday.
EGFL lends mainly to tourism and agriculture projects and Simmons said the increase in delinquency was a result of the global economic environment.
“You have our main source markets the UK and the United States still struggling with recessionary environments. You have the passenger tax that has been applied from the UK. That will certainly impact on our competitiveness as a tourism industry.
“Generally it’s the impact of the global environment that is cascading down on our tourism sector and until that moderates, you’ll continue to see some businesses struggling,” he said.
Simmons was unable to say which industry was responsible for the most delinquent loans but he noted late payments in the tourism sector were usually more impactful.
“In absolute numbers there may be more [loans of smaller amounts] from another sector that are delinquent but because of the size of a tourism investment, if that becomes delinquent the impact is more significant on a proportionate basis,” he said.
He said the delinquency was “manageable”.
The CEO also pointed out that there were some “green shoots”.
“There are one or two companies that have positioned themselves quite well in the tourism sector in terms of their pricing, in terms of the product and they’ve been able to come through more or less unscathed but unfortunately that is the minority,” he stated.
Simmons said EGFL also registered a sharp drop in loan approvals for 2012 as fewer entrepreneurs were willing to take on significant risks.
“We approved $4.7 million compared to $9 million for 2011. However, our disbursements moved from $6.9 million to $13.7 million in 2012 mainly driven by investments disbursed in the tourism and agricultural sectors,” he said.
The CEO said the fund was on track to make a profit of $400 000 in 2013.
