Managing Director of Republic Bank (Guy-ana) Ltd John Alves says that the Bank continued to demonstrate its strength and dominance in the market place “as total deposits grew by 10.7 percent to $101.7 billion during fiscal year 2012” and the bank registered after-tax profit of $2.013 billion.
“We continue to be the bank of choice, financing worthwhile projects throughout the country thereby increasing our portfolio in commercial and corporate lending by 11.8 percent and retail by 29.6 percent,” Alves said in his report to the Annual General Meeting on December 10 at the Pegasus Hotel.
Alves said that the Bank in 2012 continued to manage its assets and liabilities in an environment of inadequate investment opportunities and said that as at September 30, 2012, 47 percent of the Bank’s interest earning assets consist of Government of Guyana Treasury Bills.
“I am pleased to report that despite a challenging market environment both locally and abroad the Bank’s performance has been solid and reassuring. For the year ended September 30, 2012, profit after tax improved by 4.4 percent to 2.013 billion when compared to [fiscal year] 2011,” said Alves.
He reported that earnings per stock increased to $6.7 from $6.4 while dividends of $2.0 per stock was proposed bringing the total proposed dividends payable for the financial year ended September 30, 2012 to $875 million.
He said that net interest income remained stable at $4.8 billion and is attributed primarily to the tight management of interest expense.
He added that the ratio of the Bank’s average interest earning assets to average customer deposits, increased to 88.2 percent from 87.5 percent in 2011. “This reflects the Bank’s policy of making maximum use of customers’ deposits in a challenging environment where investments and lending opportunities are relatively scarce.
Alves reported that interest paid on deposits for 2012 at $851 million was lower than that of 2011 ($890 million) as the Bank continued to manage its assets and liabilities in an environment of inadequate investment opportunities. “We recognise however, that our customers simultaneously use a range of our products and we strive to ensure that our rates (deposit and lending) are competitive with the rest of the industry and attractive to existing and potential customers,” Alves said.
He said that other Income which amounted to $1.9 billion and contributed 25.3 percent to total income, was above the 2011 amount of $1.8 billion by $136.7 million, or 7.6 percent.
Net interest and other income grew by $194.2 million or 2.9 percent to $6.8 billion in 2012 compared to the $6.6 billion generated in 2011.
Alves reported that non-interest expenditure, which comprises operating expenses and provision for loan losses, increased by $148.3 million, or 4.4 percent over 2011 while staff costs increased to $1.6 billion. There was also an increase in depreciation charges ($3.1 million) and a significant decline in loan losses net of recoveries of $43.4 million.
He said overall in 2012, expenses related to loan-loss provisioning amounted to $134.2 million against a provision of $175.2 million in 2011. “Notwithstanding the reductions, the Bank continues to adopt a very prudent policy, especially on its unsecured consumer lending portfolio,” he said.
He said that available-for-sale investment securities, including Government of Guyana Treasury Bills, declined by 3.2 percent during the year to $1.5 billion. He noted that the decrease was mainly as a result of the maturity of Government of Guyana Debentures moving from $1.8 billion to $0.8 billion at September 30, 2012 or 54.7 percent. “The Bank aggressively competes for the limited investment opportunities even as the liquidity of the country’s financial houses continues to grow relative to those investments,” Alves said in his report.
The Bank’s advances grew by $5.8 billion to $38.6 billion, an increase of 17.7 percent. Alves reported that the concentration by sector in the loans and advances portfolio, a function of the Bank’s Credit Risk Management process, remained fairly constant during the year. “Significantly, however, the Home Mortgages sub-sector recorded a 24.4 percent increase in value from $8.6 billion to $10.7 billion. We continue our efforts both to join the Government in facilitating home construction and ownership,” he said.
Alves stated the Bank is looking forward to a stable political and economic climate in which it can continue to grow and is hoping that the inter-parliamentary party talks results in this.
“Our operating income remains strong and continues to grow. We remain hopeful that the signs of improvement in Parliamentary Government will result in further improvements in the economic and political climate,” said Alves.
Later, he added “Political stability, however, remains an imperative and efforts must be intensified to provide the requisite infrastructure for social and economic growth. As alluded to earlier, the performance of the Bank is influenced by the environment in which it operates. Hence, the constraints which continue to impede our plans need to be addressed with urgency by the relevant authorities. Similarly, the increased take-up and use of the Bank’s technological products through its network depend heavily on modern and reliable telecommunication infrastructure”.
In his Chairman’s report David Dulal-Whiteway reported on the outlook for various sectors and in touching on rice said “The rice sector, currently, viewed as the most productive agricultural sector in Guyana, with export earnings surpassing that of sugar over the past two years, is projected to continue recording growth. Production and export earnings are expected to further improve, due to the stability and buoyant prices for rice and paddy in the Venezuelan market, Guyana’s newest trading partner. The re-election of the United Socialist Party in Venezuela is expected to ensure price stability for rice/paddy and cheaper than world market prices for petroleum products to Guyana under the Petro-Caribe Initiative”.
The Chairman also reported that the bank expects to set up a new location at Lethem and to begin building a new facility at Rosignol next year.
The bank celebrated its 175th anniversary this year. Its first incarnation was as the British Guiana Bank, then the Royal Bank of Canada, the National Bank of industry and Commerce and then Republic Bank (Guyana) Limited.
