Chairman's Report
 |
"Our Head Office is nearing completion
and will be opened shortly.
Our Grove/Diamond Branch was started in 2009 and is expected to
be completed by September 2010" |
I am once again pleased to report to all stakeholders
of the Guyana Bank for Trade and Industry Limited that the Bank has
achieved a net after tax profit for the year of $991M and that the Directors
have again recommended the highest dividend payout in absolute terms
in the life of the Bank of $7.50 per share.
I recall that in my Report to you last year, I suggested
that globally the outlook for 2009 was grim. I am not happy to report
that though there were some bright sparks, such as the recovery of the
Stock Markets and the return to profitability of some major banks, that
some of the leading economies of the developed world were unable to
pull out of the recession as employment continued to rise and the usual
remedy of tax and spend did not provide the fillip to their economies
as was to have been expected.
A highly deregulated financial system which was at the heart of the
economic melt down of the world’s leading economies, and which
was made more adventurous by the laxity of regulatory bodies, had to
be bailed out with taxpayers money by governments, most notably the
Obama Administration. Some have proffered the view that the genesis
of the crisis lay in allowing commercial banks the latitude of dealing
in the Equity Markets and Derivatives Market and they have now called
for a return to the previous practice when commercial banks stuck to
their core activity of granting loans.
These thoughts have relevance for us in the Caribbean, especially Trinidad
and Jamaica with more developed financial systems, and should provide
a guide for us as we seek to deepen and consolidate our financial systems
as one aspect of our strategy to develop our economies.
So in the face of a Global Economic Crisis in 2009,
how did Guyana fare? From several reports on the economic performance
of Guyana, it must be said that we did quite well.A report of the Caribbean
Development Bank (CDB) described Guyana’s economy in 2009 as being
resilient. This was no doubt as a result of holding to a sound macro-economic
policy and fiscal discipline even though the rate of borrowing continued
to gradually increase.
According to statistics put out by the Minister of
Finance in his Budget 2010 Presentation, the economy experienced real
growth of 2.3% in 2009. Even though this was less than the 3.1% growth
achieved in 2008, this is a commendable performance especially after
experiencing a decline in the first half of the year.
It was not a particularly good year for sugar even
though production was higher in 2009 than in 2008.The industry continued
to be affected by the weather, industrial disputes and technical problems
with the Skeldon Factory, and in spite of better prices for sugar, it
had to be rescued by the Government. Because of the role of sugar plays
in the economy, it is to be hoped that the turn around plan for the
industry becomes effective sooner rather than later.
Rice production was also a major contributor to the
overall growth, as production in 2009 surpassed the budgeted target
and the previous year’s production. Exceptionally high prices
for rice and paddy in the latter half of 2008 and the first half of
2009 spurred an increase in acreage cultivated. Unfortunately, profits
to farmers and millers were squeezed between the high costs of fertilizer
and fuel and the subsequent sharp decline in prices.
But the shining star of the economy was the production
of over 300,000 ozs. of gold in the year. The incentive for greater
production was the high price for gold which topped US$1,000 per oz.
in the year, no doubt, the beneficiary of the loss of confidence in
other stores of value.
The CDB report also highlighted the stability of the
Guyana dollar, attributing this to “a strong balance of payments
performance”. The balance of payments recorded a surplus of US$234M
in 2009 and with a decline in imports, greater net capital inflows and
revenue collection that surpassed the target set, the year turned out
better than was expected after the half year report of the Bank of Guyana.
After many delays, the Takutu Bridge connecting south-western
Guyana to north-eastern Brazil was finally opened. The statistics of
usage of the bridge suggests that it will bring a fillip to the trade
between us and Brazil and it was this expectation that caused us to
open a Branch in Lethem, Rupununi, in 2006. I am happy to report that
this Branch, like all our other Branches, is doing very well.
We also were able to observe the impact of a full year
of operation of the Berbice River Bridge. Here again, statistics of
usage supports the viability of the enterprise and vindicate our decision
to be a part of the funding of the bridge.
Another highlight of the year was Guyana’s embarking
on a course to combat climate change with a Low Carbon Development Strategy
(LCDS) and our signing of an agreement with Norway to combat climate
change by reducing deforestation and forest degradation in exchange
for carbon credits. This was a bold step as it has implications for
our forestry and mining sectors, and the passing of new laws to regulate
these two sectors to be consistent with our LCDS has already caused
some social upheavals and will probably have to be studied in depth
to arrive at a proper balance between the competing interests.
The Bank has done well in 2009. Profit after tax rose
by 5.39% and our asset base grew by 9.29% to $53.9B. Our Head Office
is nearing completion and will be opened shortly. Our Grove/Diamond
Branch was started in 2009 and is expected to be completed by September
2010. Our Branch Expansion Programme is a demonstration of our confidence
in the economy and of our resolve to be a part of the financial landscape
of our country in spite of the difficult global economic situation.
The Global Financial Crisis, which has barely touched the Financial
Sector of Guyana, reached our real economy as remittances into Guyana
were significantly reduced and the collapse of the CLICO Group left
thousands of policyholders and pension fund contributors not knowing
whether or when they would recover their investments.
The Bank continues to be optimistic about the future
of our country. The government has unveiled a budget of $143B for 2010
and expects to fund this expenditure in part with current revenue of
nearly $100B. Inflation which was recorded as 3.6% in 2009 is hoped
to be kept to the rate of 4% in 2010. This is an indication that the
Government will be continuing its macroeconomic policies that have brought
us steady, if not significant growth.
In this context, the Banking Sector will remain very
competitive; all banks enjoy high liquidity and aggressively seek out
sound lending opportunities. We will do no less in 2010 and with the
sound guidance of the Board of Directors, the experience and professionalism
of the Management and staff of the Bank, I look forward to greater success
for the year ahead.
It is often said that change is inevitable, and during
the year the Bank’s longstanding C. E. O, Mr.Radha Krishna Sharma,
tendered his resignation from the Bank. Mr. Sharma, who had served the
Bank with dedication and success in that capacity for nine years, believed
it was time to formulate his career in other areas. Mr. John T. Tracey,
Director-Credit, a most experienced Banker, took over the helm of the
Bank and became the new C.E.O. We wish Mr. Sharma every success in his
new path and thank him for his years of service to the Bank.
I therefore must extend thanks to our customers who
have stayed with us and for whom we will continue to use the advances
of technology, our size, reach and home grown knowledge to offer the
finest banking service. In the same vein, I wish to thank the Directors,
Management and staff, and shareholders of the Bank for their support
to the Bank which enabled us to have another successful year