risk than the traditional banks and their cost of funds has also been higher. they have to work hard to keep their customers over the longer term as many tend to graduate to the banks as they become more successful. indeed competition across the whole banking system has noticeably stepped up in the last five years and customer bis central bankers ’ speeches allegiance is almost a thing of the past. no doubt each bank and credit institution is now being judged by its level of service. despite the intense competition, i think it is fair to say that our credit institutions have persevered in their niche areas and continue to perform well, backed by strong capital positions and satisfactory earnings performances. the combined balance sheet of the credit institutions recorded an annual growth of 33 percent over 2015, to reach $ 335million, with merchant finance limited contributing almost half. at the end of last year, combined credit institutions ’ net profit before tax stood at $ 18 million with capital and reserves growing 13 percent to $ 72 million. merchant finance limited please allow me to share a brief history of merchant finance limited. officially established in 1986 as the merchant bank of fiji, this institution initially operated as a finance company and since it did not take deposits from the public it did not come under the supervision of the reserve bank. this all changed in 1992 when we granted the company a licence to operate as a credit institution, enabling it to access public deposits. in 2002 the merchant bank of fiji changed its name to merchant finance & investment limited. further approval was granted in late 2014 to make another name change. this is the name we are actually launching tonight – merchant finance limited. so this year merchant finance limited actually enters its 24th year of serving the people of fiji as a licensed credit institution. the company has grown significantly, with an asset book of $ 21 million in 1992 to a publically reported $ 134 million in june 2015. the profitability of the institution has also increased over the years noting an ‘ all time high ’ of just over $ 8 million in its last financial year. ladies and gentlemen, as the supervisor of the banking industry, the reserve bank closely observes the relationships of our licensed financial institutions with the other sectors of the economy. as i alluded to earlier, credit institutions like merchant finance limited play the unique yet important role of servicing customers and sectors which the banks may consider as high - risk. it is pleasing to see that merchant finance limited ’ s reach as a lender has extended to many key sectors in the economy, such as transport

the main core of our tourism industry operations, as well as key manufacturing and production centers, and our main commercial areas, have been spared. there are of course exceptions in one or two areas, but overall, losses may not be very large. full restoration of electricity supply will naturally be an important element for our industries to bounce back strongly, as will be the public relations campaigns overseas to ensure our potential foreign visitors get the correct message that our tourism sector is already up and running. it has been extremely pleasing to see our fiji electricity authority playing a key role in working around the clock to give us power. in fact many areas have already been reconnected. we have also seen how our tourism industry has been very proactive, along with government, in doing whatever is necessary to keep the visitor arrivals momentum going. given these positives, i would expect that our key manufacturing and service sectors should continue to support our growth in the short to medium term. in regard to the reserve bank ’ s key objectives, it is likely that we will see some fall in foreign reserves as our domestic exports, including sugar and other agricultural products are impacted and as our importation of reconstruction hardware and other related items rise. however there will be some offsetting positives in terms of foreign aid and assistance inflows which have already begun to flow in through in - kind grants and even raised levels of remittances from our families abroad. while our reserves levels are currently very comfortable, any signs of sustained pressure on them will be addressed through appropriate measures, including accessing special funding from the international monetary fund, which has already indicated its willingness to assist. on the inflation front, we will likely see a rise in the prices of domestic produce over the next three to six months on account of reduced supply, but this should ease in the second half of the year as supply improves. the timing will depend on how fast our farmers are able to rejuvenate their farms. they will need much assistance with seed material and i very happy to see this has already been activated by our government with the support of a number of local and foreign agencies. also on the positive side, the sustained low oil prices should help cushion the cost of recovery for those affected. dear friends there has been so much activity around us in support of our people who have and are still suffering the effects of tc winston. some areas, such as housing, will take time to fully recover. but i am confident that the government is doing all