Guyana Bank for Trade & Industry Ltd. (GBTI)

The staff of GBTI is composed of individuals who possess extensive industry experience and are unmatched in their integrity and their ability to understand customers' unique needs and specific situations..

I am pleased to report on behalf of the Directors,Management and Staff on the financial performance of the Bank for the year 2009,and on the activities and strategies that have yielded the good results that are presented in the Financial Statements. In short, notwithstanding the challenges of the local economic and business environment, we have achieved growth in profits of 5.4% and growth in net worth 21.5%, which has enabled the Directors to propose a dividend payout ratio of 30.2% for 2009.

Economic Review of 2009
Against a projected real growth in the local economy of 4.7 percent for 2009, the 2010 National Budget indicated that the Guyana economy recorded real growth of 2.3 percent in 2009, following on the growth rates of 3.1 percent in 2008 and 5.4 percent in 2007. Inflation was recorded at 3.6 percent for 2009 as against 6.4 percent for 2008 and 14 percent recorded in 2007. Growth in the non-sugar sectors of the economy in 2009 was recorded at 2.2 percent,within which rice grew by 9.2 percent but fishing declined by 10.5 percent.Overall, export earnings decreased for the year by 4.2 percent to US$768.2 million due the pressures on the global prices of our major products. However, revenues from export of gold increased by 38.3 percent to US$281.7 million as productionresponded to the higher international prices. In 2009, while the volume of sugar exported increased by 3.4 percent,export receipts declined by 10.2 percent to US$119.8 million. Exports of rice also increased, by 32.9 percent for 2009, however revenues declined by 3.3 percent to US$114.1 million due to the decline in the average price.The impact of the global economic and financial crisis has been less severe on Guyana as expected, than some of our sister Caricom countries, though a number of significant infrastructure projects earmarked for commencement were impeded due to the lack of financing from the international markets. The signs seen of stabilization returning to the world’s financial markets in the third quarter 2009 could signal better possibilities for these projects to be implemented in 2010, but nevertheless, other serious challenges remain to the addressed in the wider local economy.

Performance of the Local Commercial Banking Sector
As reported in the Bank of Guyana’s Statistical Abstract at December 2009, the commercial banking sector continued along its growth path in 2009 with total assets of the sector increasing by $21.1 billion to $253.7 billion at the end of 2009 compared to the $28.7 billion growth recorded for 2008,.

Deposits
Total deposits of the sector at December 2009 stood at $214.4 billion, a 9.4% increase for the year compared to the 11.6% growth for 2008. Savings deposits grew by 13.1% to $130.7 billion, while Time deposits increased by 5.7% to $44 billion.

Lending
Total loans and advances of the banking sector stood at $64.4 billion at the end of 2009, and represented 30.0% of total commercial bank deposits, compared to 32.7% at December 2008. Lending to individual customers declined by an average of $1.2 billion while lending to business enterprises increased by an average of $2.5 billion and to non-residents by $558 million.An examination of lending to the sub-sectors shows other services increasing by $1.4 billion,cane farming by $740 million, rice farming by $684 million and other manufacturing by $635 million.Areas recording decreases in lending were rice milling by $1.3 billion, distribution by $602 million,timber and sawmilling by $470 million and other construction by $310 million.

The Distribution sub-sector remains the largest recipient of credit, accounting for 21.3% of the total, while the combined transportation sector (public and private transport) accounted for 9.7%.

Liquidity
The local banking system continues to be very liquid with banks at December 2009 holding liquid assets of $80.5 billion (31% of their total assets),which confirms the soundness of the country’s banking system. Local Treasury bills accounted for $55.9 billion (66.5%) of the banks’ liquid assets at December 2009 compared to $43.9 billion (65.7%)at December 2008.

Interest Rates
The 91 days Treasury bill rate, the benchmark for the interest rate structure, was stable at 4.18% throughout most of 2009, up from the average of 3.95% for 2008. The commercial banks’ weighted average small savings rate declined from the average of 3.15% for 2008 to 2.80% for 2009.

Exchange Rate
The Guyana dollar market exchange rate per US dollar averaged $202.75 for 2009, from $201.75 for 2008. The Guyana dollar market buying rate for the US dollar at December 2009 was $201.67 versus a selling rate of $204.40.

Developments in the Sector
A number of new and amended legislation relevant to the banking industry were passed in 2009. The Anti-Money Laundering and Countering the Financing of Terrorism Act of 2009 provides for the establishment and management of a Financial Intelligence Unit to which the banks are required to report suspicious financial transactions, and outlines several documentary requirements pertaining to the operating and maintaining of an account with a Bank.

The Bill of Sale (Amendment) Act of 2009 provides for Bills of Sale to be renewed every three years instead of annually. The previous requirement that these be renewed annually placed some administrative burden on the banks, customers and the Court, and the move is welcomed by the banking community, which had long advocated for it to be addressed.

The Rice Factories (Amendment Act) Act 2009 implements restrictions on the time period and amounts that millers are allowed to owe farmers for paddy supplied. This is helpful to the banks since extensions would often have to be granted to farmers on their loans because of the non-receipt of payments from millers. We welcome the start of initiatives for the establishment of a Credit Bureau in Guyana following the tabling of the Credit Reporting Bill in Parliament in October 2009. The Bill seeks to establish a credit reporting industry to provide information to creditors about the creditworthiness of borrowers.

Review of the Bank’s Performance
In 2009 the Bank again delivered a solid profit,while maintaining strict balance sheet discipline. Profit after tax for the year was $991.4 million, delivering a return on average equity of 19.2%
and return on average assets of 1.92%. Total assets of the Bank have grown by $4.6 billion (9.3%) to $53.9 billion, while revenues for the year rose 6.5% to $3.8 billion. Earnings per share rose by 5.4% to $24.79 with the book value per share rising to $141.30. At the end of the financial year, the Bank’s shares were priced at 0.93 times book value.

Operations in 2009
In 2009, which was a challenging year for banking,we continued to develop our core business while maintaining our strategy of excellent customer service, sound credit management, carefully managing asset quality, enhancing revenue sources and controlling operating costs. We continued to successfully increase the level of business from our customers by our cross marketing strategy which enabled us to continue the good performance recorded in 2008. The branches of the Bank continue to be competitive in their locations with adequate support being provided by the Executive team at Head Office.

Revenues
Revenues for 2009 amounted to $3,836 million, an increase of 6.5% over that for 2008. Net interest income increased by 12.6% while non-interest income increased by 9.2%.

Expenses
Total expenditure for the year was $2,428 million compared to $2,485 million in 2008. Interest expense accounted for $956 million while non interest expense increased due mainly to higher premises and administrative costs.

Total Assets
The Bank’s asset base has grown by $4.6 billion or 9.3% compared to the $6.4 billion growth for 2008. Our share of commercial bank assets has remained stable at 21% for the year. Our mix of assets at the end of the year was 55.7% Cash Resources; 7.9% Government-backed and other Primary Securities; 24.3% Loans and Advances and 12.1% Fixed and Other Assets. Our holdings of Government treasury bills increased from $11.5 billion in 2008 to $18.8 billion in 2009. We continue to maintain a strong and stable portfolio of assets and liabilities and a level of liquidity conducive to efficient operations.

Deposits
The Bank’s deposit base grew by $4.8 billion or 11.8% for the year to $45.8 billion. Our deposits continue to record strong growth in response to our marketing efforts for our range of deposit services: Early Savers and Prime Life Accounts, Regular and Statement Savings Accounts, and Term Deposits and Special Investments Accounts. Our share of commercial bank deposits has remained stable at 18% for the year.

Investments
Total investments has decreased by $1.6 billion for the year as we capitalised on price gains within the portfolio. Our investments continue to be concentrated in Regional Sovereign Bonds, which are extremely sound, carry low risk and offer premium yields. Our investment in securities is done within the parameters of an Investment Policy that seeks to maximise returns while maintaining a focus on liquidity and capital preservation.

Loans and Advances
The Bank’s loan portfolio at the end of the year stood at $15.1 billion. Within the balance at the end of 2009 was $305 million representing funds disbursed under the EU Rice Facility. Loans at the end of 2009 (less E.U. loans) were 33% of deposits compared to 36% at the end of 2008. The Bank’s share of total commercial bank lending was marginally better at 23.5% at December 2009 compared to 23.0% at the end of 2008.Major new loans for the year were granted in the distribution and manufacturing sectors, and a review of the portfolio shows performing accounts amounting to $13.6 billion (90% of the portfolio versus 87% in 2008). A sectoral analysis of the portfolio shows that the distribution sub-sector accounts for $4.6 billion (30.5%), the rice sector for $1.6 billion (10.7%), housing $1.5 billion (9.8%) and timber & sawmilling for $1.0 billion (7.6%).

The lending strategy for the Bank in 2009 continued to centre on the GBTI Quality Lifestyle and Commercial Loan Plans. At the end of 2009, the balance of Quality Lifestyle Loans was $1.7 billion, while the balance of the Commercial Loan Plan was $12.5 billion.The distribution of our portfolio at December 2009 is as follows:

We continue to strenuously analyze market conditions, and over the years have taken a measured and responsible stance in lending, avoiding the desire to increase returns by taking substantially more credit risk. This, we feel, has contributed to the strength of our asset quality and has positioned us well for success in the future.

Capital Adequacy
The Bank is subject to the risk-based capital adequacy guidelines issued by the Bank of Guyana and conforms to the Basel capital adequacy standards for the calculation of the Bank’s capital adequacy ratio. The guidelines evaluate capital adequacy based upon the risk associated with balance sheet assets as well as certain off balance sheet exposures, and stipulate a minimum ratio of qualifying capital (Tier I and Tier II) to riskweighted assets of 8%. Our capital ratios at the end of 2009 tell of the strength of our institution with the total Tier I and Tier II capital at 19.85% of risk-adjusted assets at December 2009, compared to 16.15% at the end of 2008.

Risk Management and Internal Control
The Bank’s internal control system is directed by a set of policies and processes that are integrated within our daily operations. During 2009, we continued to work to enhance the effective functioning of the system, particularly with respect to compliance and risk management.The Bank’s internal control system is monitored and managed by an Inspection Division that reports directly to the Audit Committee of the Board of Directors. The Division’s Annual Work Programme focuses on the key operating procedures and system of financial controls that are designed specifically to address the risks to which the Bank is exposed. The Division periodically reviews the effectiveness of the internal control process and makes appropriate recommendations for revisions to the Audit Committee.

Customer Service
Our aim to provide the most attractive and convenient services formed the core of our strategy for our customers in 2009. We have consistently placed top priority on the customer’s perspective through their feedback, and during the year adopted several approaches in our responses for improving customer satisfaction. We continued during the year to conduct all our business to the highest ethical and corporate governance standards, which we see as key to building trust and confidence in the Bank, since it is our goal to be always respected and trusted by the community.

Our new head office building is nearing completion and is expected to be launched by mid year. The Bank intends that this new facility will allow it to enhance its service to its corporate clients and drive our initiatives for improving our overall level of services to our customers.The Bank remains committed to taking banking services to communities across Guyana in order to improve the welfare of residents and support the country’s overall economic development. We are presently in the midst of construction of new premises at Diamond, East Bank Demerara, to house the operations of our existing branch in the area, and expect this to add further value to our product offerings to residents on the lower East Bank of Demerara. Our general marketing activities continued during the year for all products and services through direct approaches, mass advertising and community outreach exercises. Prize competitions were also held during the year targeting the users of specific services: Early Savers, Prime Life Savings, Kaieteur Classic Card (ATM) and Point of Sale (POS).

Human Resources
The loyalty and professionalism of our staff in all areas of the Bank continue to be the most critical element guaranteeing the ongoing successes of the Bank. We are pleased that each employee shares the Bank’s vision of improving customers overall banking experience and the Bank supports this vision through ongoing training aimed at building human resource capacity. We have continued to foster an environment where staff can develop both personally and professionally, and provide the appropriate training to help them reach their full potential within the Bank. We provide the requisite support to aid them in achieving their personal goals. Some of the benefits provided to support the academic development of staff include interest free loans for study material and computers, funding of approved course fees and study leave. The overall staff complement of the Bank at December 2009 was 263 consisting of 215 clerical personnel and 48 support staff.

Community Relations
As an organisation, we recognise our corporate obligations and responsibilities and are committed to fulfilling them. Our forms of support for the development of the wider community include sponsorship of programmes in the fields of the arts, education and sport. The Bank has an extensive programme of community activities that is conducted through our branches, which we believe serves in a tangible way to demonstrate our continuing commitment to fostering the development of communities. We remain firm in our goal to maintain and strengthen our links with the various organisations that play a pivotal role in enriching lives in our communities, and have continued to reach out annually through financial donations and other means of support. The Bank played an integral role through a Financial Deed in the reconstruction of the Barclays Wing at the Government Technical Institute, which was renamed the Guyana Bank for Trade and Industry Wing” at a ceremony in February 2009. Several students who are members of the Bank’s Early Savers Club received bursary awards from the Bank in recognition of their excellent achievement at the 2009 National Grade Six Examinations.These students obtained scores ranging from 550 to 562 marks.

The Bank launched its Almanac for 2010 in December at a ceremony attended by Ms. Inge Nathoo, Chairperson of the Guyana National Commission for UNESCO. The Almanac addresses the use of the family unit as a key tool for providing the basis for the stable development of the child, and the expressions of the six selected entries are presented under the theme “Your Home, Your Life, Live in Love”.

Looking Ahead
Government has projected the economy to grow by 4.4% for 2010. This presents us with greater opportunities to continue our lending support to trade and industry. Prospects for the success of large gold mining operations remain high given the high world market prices and the number of companies that are currently exploring on the local scene. The harnessing of the country’s vast hydropower potential is yet to become a reality, but hope remains in the highly touted 100 mw hydropower station at Amaila Falls, Kuribrong River.The private sector welcomes the important investment in a Submarine Cable System that stands to boost the local ICT sector by making available considerably larger bandwidth capacity for delivery of telecommunications and related services to and from Guyana. This investment has significant and positive downstream effects for the knowledge services sector and the employment of our young people.

As a Bank, we will utilise our financial resources, combined with our innovative products and our passion for customer service excellence, to position the institution to lend meaningful support to consumers and businesses and to ensure continuing success in this challenging economic environment. We will execute our long term strategy by building on our historic strengths in lending and by providing a wider array of products and services. In this respect, we propose to launch our Web-based Banking Portal by the third quarter of 2010, thereby allowing our customers enhanced access to their accounts. We will also be examining other opportunities to expand our branch, ATM and POS network. Construction of our new head office building at Kingston and new branch building at Diamond will be completed during the year, thereby enabling us to add greater value to the service we offer our customers. The Bank remains committed to improving market share and taking advantage of opportunities to enter new markets, while continuing with our strategy of financial prudence and meeting the high expectations of our customers and all other stakeholders. We will continue to observe best banking practices to deliver further growth in a focused, disciplined and decisive manner

Acknowledgements
The strong team effort of all staff of the Bank enabled us to have a successful year in 2009. I applaud especially the staff at the branches for their diligence in customer satisfaction, expense controls and maintaining strong credit quality. Our management team remains committed and attentive to the initiatives set forth for the long-term growth of the Bank, and I commend each of them for their continued hard work. I would like to take this opportunity to thank our customers, business partners and colleagues for their support in 2009 and state that we look forward to continuing to serve and work together with them in 2010.I wish to also thank the Chairman and other Directors of the Board for their support and their very sterling contributions to the Bank.