The Chairman of Demerara Bank Limited (DBL), Yesu Persaud told shareholders at the company's seventh annual general meeting on Monday afternoon at the Le Meridien Pegasus Hotel that given the overall economic environment, DBL's performance in 2001 was satisfactory and he indicated that two new branches would be opened this year. One will be opened at Bagotstown within three months.

Additionally, DBL will be installing more Automatic Teller Machines and developing upgrades for its Probanker service to allow for its product to be available via the Internet to customers anywhere in the world.

DBL made an after tax profit of $107 million for the year ending September 30, 2001, some $35 million below the previous year's level. The bank's gross profit was $202 million after providing $179 million for bad debts, taking total provisioning to date to $489 million. Non accrual loans at the institution amount to $2.1 billion, up from $l.25 billion the year before, against a loan portfolio (after allowance for loan losses) of $6.2 billion.

"Our focus for the year was qualitative improvement in our portfolio rather than expansion. Focus remained on providing personalised and high technology based services to our clients and the recovery of dues in classified accounts," Persaud told the shareholders. He anticipates that the bank's performance this year would be better than 2001.

Of the loan portfolio, which declined marginally as a result of loan loss provisions, the commercial trading and distribution sector accounted for 25% of the $6.7 billion in loans. This was followed by services 21%, manufacturing 18%, agriculture 16%. Real estate development and personal loans were seven per cent each and the construction sector four per cent whilst mining and quarry and banking and insurance each had one per cent of that portfolio.

Investments in government securities accounted for $1.5 billion, an increase of 39% over the previous year. Other investments also increased by $5 million to $8.3 million.

There was an increase of 8.5% in DBL's deposits, which moved up to $8.2 billion with 2,683 new accounts being opened during the year. Deposits were largest by the professional services group accounting for $5.2 billion, followed by the personal sector at $3.4 billion. The manufacturing sector accounted for $160 million of DBL's deposits and agriculture and mining $16 million. Others accounted for $5 million.

Meanwhile, DBL's chief executive officer, Pravin Dave, said that the majority of banks, including DBL, had a very cautious approach to lending in 2001 and banks had to focus on consolidation and recovery of dues and reduction of non performing assets.

However, he sees DBL's financial results as being very good for the year 2001 under very difficult economic circumstances.

He said during 2001 the bank engaged in a comprehensive revision of its loan policy, which spells out its objectives in lending, areas of priorities, and pricing policy for customers based on a credit rating system.

"We are focusing on a clear and transparent structure of our lending operations which will facilitate the smooth flow of credit to customers. We shall be able to identify weaknesses in loan accounts at the initial stage, enabling the bank to take preventative steps," Dave said in his report. He noted the loans portfolio had an even distribution in all segments of business and limited exposure to rice.

"Most of our advances are well secured, which will ensure the recovery of our dues," assured Dave.

He noted that the bank's profitability has improved as total operational income has gone up from $576 million to $623 million. However, there was also a rise in personnel expenses and other expenses, which have minimised the gains. He said the increased provisioning over the previous year of nearly $67 million resulted in the lower net profit. However, given the state of the economy, he said the results were reasonably good with return on average assets being 1.03%, higher than the internationally accepted level of one per cent.

"Our return on net worth is 11.40%, which is very good compared to the industry average in Guyana," said Dave.

He said in the coming years, the bank's focus will be on recovery of dues in its classified accounts, controlling operating expenses and improving non fund based income.

Commenting on the investment portfolio of the bank, Dave noted the lack of diversified investment opportunities in Guyana and cited the lower yields on government treasury bills. He noted the increased investment in these securities amounting to 39% and said that DBL will this year explore the possibilities of a more diversified investment portfolio.

Dave said that the major objective of DBL in the coming years would be to consolidate its financial gains and to broaden its customer base by aggressive marketing and opening two branches outside the city.