Despite operating in an economy that remained flat during its last financial year, Citizens Bank has recorded $193.5 million in after-tax profits, a 27.2% increase on the previous year.

According to reports from Chairman Clifford Reis and Managing Director T. Allan Parris, at Citizens Bank's annual general meeting yesterday the bank turned in a creditable performance during the financial year 2003.

Net income was $708.8 million, an 8.2% increase from the previous year. Assets grew from $9.3 billion in 2002 to $10 billion in 2003; deposits increased to $8.6 billion, 7.95% over the previous year and earnings per share were $3.84 compared with $2.56 the previous year. Loan and investment growth and reduced expenses contributed to the record earnings performance. "The annualised return on average assets was 2.07%, while the return on average shareholders' equity was 20.35% up from the 2002 returns of 1.70% and 18.40% respectively," the annual report said. The bank's efficiency ratio was 49%, comparing favourably with its peers.

Non-performing assets were pegged at $357.9 million, down 11.6% from $405.1 million in 2002. The bank is building a conservative loan-loss reserve, in spite of having relatively low loan losses. For 2003, the loan loss provision increased by $23.6 million, taking the total provision to $140 million or 2.90% of the bank's portfolio. Net loan charge-offs were $56.1 million in 2003, representing 1.20% of average loans. Recoveries were $1.2 million or 2.10% of the total charge-offs in 2003.

And with regard to loans, these only increased from $4.5 billion to $4.6 billion, which was put down to the weak demand for credit in the private sector. "Commercial banks continue to find it difficult to identify and lend to viable private sector projects in the present environment, with high loan default rates and significant provisioning for bad and doubtful debts," the annual report said.

The annual report stated that private sector credit declined by 19.90% to $36.7 billion at September 30, 2003. "This result was mainly on account of the transfer of $8.5 billion of the privatised Guyana National Cooperative Bank (GNCB) loan portfolio from the banking system."

It noted that in the banking sector, the 91-day Treasury Bill rate declined from 3.93% as at September 30, 2002, to 3.40% one year later. The weighted average lending rate declined by 124 basis points to 15.92%, while the average savings rate declined from 4.40% at September 30, 2002, to 3.54% at September 30, 2003.

Need for an enabling environment to attract sufficient investment, both domestic and foreign was noted as well as what would result if this were not done: an increase in criminal activity, reduced levels of economic activity and further loss of human resources through migration.