The Guyana Bank for Trade and Industry (GBTI) registered an after-tax profit of $2.032 billion for 2016, 1.5% above the previous year but it also saw loan impairment expenses of $899 million.
GBTI will be holding its Annual General Meeting on May 22 at its corporate headquarters in Kingston and will be doing so under a cloud after recent revelations that it had been defrauded in March this year of $956 million. Gold dealer, Saddiqi Rafeek Mohamad Rasul has since been charged in this matter and placed before the courts. Some weeks after this incident, it was revealed that long-serving GBTI Chief Executive Officer, John Tracey had retired. There was no mention in the 2016 annual report that Tracey would be retiring.
Net interest income for GBTI in 2016 was $5.04 billion compared to $4.71 billion in 2015. Other income was up by nearly a whopping $1 billion and this immensely helped the bottom line.
Other income for 2015 was $1.38 billion compared to $2.35 billion in 2016. The loan impairment expense for 2016 was $899 million compared to $620 million in 2015. Loan impairment has been a problem across the banking industry and has been cited as a sign of trouble in the economy. Taxation in 2016 was $499.9 million compared to $673.3 million in 2015.
In his CEO’s report in the bank’s annual report, Tracey said that loans and advances were $45.5 billion, down 5.2% from 2015. He said that the slowdown in the economy had affected the bank’s loan portfolio and during the year efforts were focused on improving the quality of the portfolio. Non-performing loans had fallen by 5% as he said that the bank continued to work with their customers. Legal redress in some instances had proven to be a slow and difficult task. He added that the bank has continued to make the necessary provisions to offset any potential losses from the non-performing elements of the portfolio and that the loans were well-collaterised.
Looking ahead to this year, Tracey said that the performance of the bank in 2017 “will be significantly influenced by the performance of our loans portfolio. An improvement in the level of our non-performing loans is a key objective in 2017”.
With the slowdown in lending activities, Tracey said that investments were utilized to maintain adequate returns. Investments, he said, grew to $22.1 billion from $20 billion in 2015. Income from investments in 2016 was $1.5 billion, an increase of 35% over 2015.
The bank experienced a marginal increase in deposits from $82.3 billion in 2015 to $82.9 billion in 2016. For the year ended December 2016, Tracey said that the bank paid interest expense of $912 million which he said was the highest amount of returns paid to depositors in the local banking industry.
“Our deposits rates are superior to the large banks as we believe that depositors should be adequately compensated,” he asserted.
Tracey said that 2016 has been the most challenging of the past five. “Even though the year began with an upsurge in national fervor as this was our Golden Jubilee of Independence and a record budget, the economy remained sluggish throughout.
It ended with a degree of concern over the state of the foreign currency market,” Tracey stated.
He said that with an unclear future for the rice and sugar sectors, the economy may experience significant changes and challenges in the short to medium term.
He added that while oil revenues are on the horizon, the need for a well-diversified economy could not be over-emphasised. He said that efforts should be tailored to ensure the survival of these traditional sectors.
In his report, GBTI Chairman Robin Stoby said, “The bank’s loan exposure to the rice and sugar industries dictates our active interest in the direction of policy action by government and other stakeholders.
We recognize that the cost of recovery from inclement weather is one that farmers have borne heavily over the years, and now the loss of prime markets is one that they can ill-afford.
We therefore look forward to concerted efforts by government and other stakeholders in cooperating on initiatives in improving efficiency and embracing new standards for quality assurance in these industries as a precursor to finding new markets.”
