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Chairman's Report
“...The performance of the Bank is best captured in the line
item in the income statement, “net income after tax ” which is reported as being $796M....”I am pleased to report to you on the overall
performance of the Bank within the context of
the prevailing socio-economic conditions of our
country during the year 2007.
My task is made easier by the outstanding performance
of the Bank in 2007.The performance of the Bank is
best captured in the line item in the income statement,
“net income after tax” which is reported as being
$796M.This represents an increase of 57% over 2006
and has enabled the Board of Directors to recommend
a dividend of $5 per share.
In the global context, the year 2007 will be remembered
for the meltdown of the sub-prime mortgage market
in the United States of America.The resultant
ripple effect of the meltdown was felt also in
Europe,due to the way in which these mortgages
were packaged and sold to banks and other managed
fund companies (a process known as securitization)
in and out of the United States,but mostly in
Europe.This market because of its size, saw some
banks having to post sizeable losses, and the Federal
Reserve and the European Central Bank having to
intervene to ensure the liquidity of their Banking
System.
Though we sometimes bemoan the relative lack of
sophistication of our financial system we can take
comfort in the fact that we are not presented with the
temptation to engage in predatory lending practices
driven by exorbitant expectations of profit.
At home, our Bank like many others had great
expectations of a significant boost to the economy
from our staging of a leg of World Cup Cricket. As we
came to realize the cricket did not live up to its billing
though it had its moments.The staging of World
Cup Cricket was,however,credited with helping the
construction sector to grow by 6.6% in the first half
of the year, though we are yet to see the value of the
many hotels that were built during that time.
The second notable feature of the year in Guyana was
the introduction of the Value Added Tax (VAT)at the
rate of 16% on VAT subject items. This was no doubt
the reason for an improved fiscal position by the end of
June 2007. The down side of this, however,has been
a steep rise in the consumer price index. This situation
needs close attention as our economy like many others
relies on consumer confidence and spending to remain
buoyant; I say so despite the validity of the Finance
Minister ’s half year report which indicated that the
rise in the consumer prices was mainly import driven.
It must be observed that the rate of VAT (regarded
by many as too high), does not take into account the
broad range of goods and services that was never
captured by any such taxation before, and as a result
it was inevitable that the consumer price index would
rise.
There was, however, good news in the half year report.
The economy grew by 5.8%.There were increases in
the production of sugar, rice, fishing, poultry, forestry,
bauxite, gold, distributive trades, transportation and
communication, engineering and construction.
The prospects for the rest of the year seem equally good.
Most pundits agree that Guyana needs a sustained
double digit growth rate to make a significant impact
For the benefit of the welfare of its citizens.It is to be
hoped that 2007 will be the start of such a recovery.The Outlook for 2008
From election date in 2006 to the end of 2007,Guyana
would have seemed to have matured politically.Such
stability is a prerequisite for investor confidence,though
the high cost of production driven by high energy cost
remains a deterrent.With the cost of oil expected to
reach record levels in 2008,the Government needs
to have an energy policy that envisions a solution to
the escalating cost of oil which in addition to driving
up the cost of production has a severe impact on our
balance of payments.Clearly insufficient attention
is being paid to the need to reduce hydro-carbon
consumption,and to realize the benefits of renewable
energy alternatives.With a country blessed by
abundant sun, water and wind, it seems strange that
we have not made the most of our natural advantages.
Perhaps the commercial banks could devise a way
to be the catalyst for the development of alternative
energy in Guyana.In 2008, rice and gold prices are expected to rise
further.Rice should benefit from the overall rise in
the price of grains as some grains are now being used
for fuel rather than food and as the world demand for
rice increases. The gold price should become again
the store of value of choice as the US dollar continues
to lose value against the currencies of its major trading
partners.The Transportation and Communication Sector
should be impacted significantly in this year with the
completion of two (2)bridges,the Takutu Bridge in
the south and the Berbice River Bridge in the eastern
end of Guyana. The completion of the Takutu Bridge
.....Banking is founded upon trust. Trust is bounded
upon integrity, ability and performance. Indeed the
Bank as performed very well in 2007.Our assets have
reached $43B,our capital base has grown to $4.3B...
should see the already growing trade with Brazil
expand even further and validate your Bank ’s vision
to open a Branch in Lethem in 2006.The Financial Sector was said to have grown by 6.2%
at the end of June 2007.Loans by commercial banks
increased from $43.3B in January to $45.1B by the
end of June. Total commercial banks assets reached
$200B by October of which $42B were represented by
Central Government Securities and $53B were Loans
and Advances to the Private Sector.The year has witnessed a decline in the holding of
Central Government Securities and an increase in Loans
and Advances to the Private Sector by commercial
banks. This shift of assets from the lower yielding
Government securities to the higher yielding loans and
advances has seen the Banking Sector posting record
profits in 2007.Our Bank has been a part of this shift, responding
to the demand for credit from most sectors of the
economy. We are also extremely proud of the fact that
in November 2007, we became the first local bank to
introduce the Visa Credit Card. This latest product of
our Consumer Credit Division, I am pleased to say, has
been widely accepted by the market and completes for
the time being our array of credit products which cater
for all sectors of the economy. While our consumer
credit products are geared to enhancing the lives of
individuals by providing credit with convenience and
security, our commercial credit products are geared
to assisting the expansion of production capacities
of our businesses. We are proud of our partnership
with individuals and businesses alike and would like
to express our gratitude to them as well as to our loyal
depositors.Banking is founded upon trust. Trust is founded upon
integrity, ability and performance. Indeed the Bank
has performed very well in 2007. Our assets have
reached $43B, our capital base has grown to $4.3B
and we have made a net profit after tax of $796M.I
am therefore very pleased to note that on the strength
of this performance and the belief that such growth
of profitability can be sustained given all the macro-
economic indicators present, the Board of Directors
has recommended a final dividend of $3 per share
bringing the total dividend paid for 2007 to $5 per
share.For such achievements, I wish to record on behalf of
the Board our gratitude to the Management and Staff
of the Bank, our loyal customer base for whom we will
continue to strive in 2008 to give excellent customer
service and to you, our shareholders.
Downloadable copy of Chairman's Report (1.18KB PDF)
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