This paper investigates the profitability determinants of deposit-taking institutions in Fiji, a representative South Pacific economy, over the 2000-2010 period. The study uses panel data techniques of fixed effects estimation and generalized method of moments (GMM) to purge time-invariant unobserved firm-specific effects and to mitigate potential endogeneity problems. Market power (measured by the Lerner Index) is a key determinant of profitability, which, inter alia, allows institutions to pass on to their clients the interest costs of raising deposit liabilities and the overall cost of operations; the association of both with profitability is positive and highly significant. Moreover, raising deposit liabilities and granting loan beyond a certain point may not be profitable for institutions. Policy implications are considerable, especially for the small, fragile, growth-challenged South Pacific island economies.