Loans by the Guyana Bank for Trade and Industry for 2012 rose by 46.8% over the 2011 figure, driving its profit for the period up by 32% and the bank says it is gearing for stricter money laundering laws and compliance with the US Foreign Account Tax Compliance Act (FATCA).
The bank made a profit of $1.8B for 2012 compared to $1.3B in 2011. Its annual report for 2012 stated that its performance was driven mainly by its loan portfolio. Total loans at the end of the year stood at $35B which reflected a net growth of $11.3B or 46.8% over December 2011. The bank, which will hold its Annual General Meeting on June 10, 2013, said that it now has 22% of the banking industry’s loan portfolio compared to 18% the previous year.
Chief Executive Officer John Tracey in his report said that despite the growth in loans “we continued to adhere to the sound tenets of lending while responding on a timely basis to the exceptional demand for financing”. He added that the bank had increased its exposure to developing sectors such as services, mining and quarrying.
Household loans were also up. Non-performing advances represented 6.9% of total loans compared to 8.6% in 2011. It was not possible to discern the breakdown of loans to the various sectors as the legend for the chart in the annual report was not clear. However distribution accounted for the largest segment at 27%.
During last year, Tracey’s report said that the bank launched an upgrade of its operating software in what he described as one of the most significant projects in the bank’s recent history.
“Whilst the process has been a difficult one with many challenges arising, at the end of the year, I am happy to report the process has been successful. The bank expects the anticipated benefits of this upgrade will materialize in the coming years. This upgrade is expected to bring significant cost savings as well as provide a platform for superior customer service”, he said.
The challenges with the new core banking application were responsible for the late presentation of results for the year 2012.
Assets for the year rose by 17%. The bank’s deposit base grew over the year by 16%. Savings accounted for 50% of the deposit mix, demand deposits 26% and time deposits 24%.
In terms of investment, Tracey said that the Treasury Bill market had become saturated and yields were low. This has led the bank to search for new investment options. Its foreign investment portfolio grew by $2B to $10.1B.
He also said that GBTI was preparing for FATCA. Local banks had been tightlipped on this. Republic Bank (Guyana) was the first local bank to announce last year that it was preparing for FATCA compliance.
Under FATCA US persons holding financial assets outside of the United States are required to report these assets to the US Inland Revenue Service (IRS).
Foreign financial institutions must enter a special agreement with the IRS during 2013 to give effect to such reporting.
GBTI’s interest income was $4.5B last year against $3.6B in 2011.
Interest expense over the period was down, a recent trend in the banking sector. Interest expense in 2012 was $856M compared to $947M in 2011.
This left net interest income at $3.6B in 2012 compared to $2.7B in 2011.
Other income in 2012 totalled $1.02B compared to $859M in 2011. This boosted net interest and other income to $4.6B in 2012 compared to $3.6B in 2011.
Operating expenses rose in 2012. The 2011 figure was $1.8B while the 2012 figure was $2.07B. Loan provisioning net of recoveries was $37.3M in 2012 compared to $134.9M last year.
Profit before taxation amounted to $2.5B in 2012 compared to $1.9B in 2011. Taxation in 2012 was $729M compared to $526M in 2011. Basic earnings per share was $45.35 in 2012 and $34.57 in 2011. Return on average equity was 22.03% in 2012 compared to 19.79% in 2011. Return on average assets was 2.23% in 2012 compared to 2.01% in 2011.
