GBTI increases profit for 2006 by over 50% to $506m
Stabroek News
March 9, 2007
The Guyana Bank for Trade and Industry Limited (GBTI) made a profit after tax for the year 2006 of $506m making 2006 one of the most profitable years for the Bank. This result is $170m or 51% above the performance achieved in 2005.
In the report to shareholders of the Chief Executive Officer, Mr R.K. Sharma contained in the company's Annual Report he said the improvement in net profit for 2006 resulted in an increase in the return on average assets from 1.12 percent in 2005 to 1.52 percent in 2006.
Return on average equity improved to 14.56 per cent for 2006 compared to the 10.42 per cent in 2005, while earnings per share rose to $12.65 in 2006 from the $8.36 in 2005. The book value per share is now $91.22 compared to $82.58 in 2005.
The CEO said that revenues for 2006 amounted to $2,745m, an increase of 15.5% over that for 2005. Loan interest income increased by $122m, investment income by $126m, and other income by $174m for the year.
Total expenditure for the year was $1,960m. Interest expense accounted for $748m, an increase of 13.2% over 2005. Non-interest expense declined by 15%, caused mainly by the lower amount charged against profit for the year as provision for bad and doubtful debts of $510m compared to the $571m charged in 2005.
Mr Sharma said the Bank's asset base, net of contra items, has grown by $4.8b or 15.6% for the year, compared to the increase of $2.7b or 9.6% in 2005. "Our share of commercial bank assets has grown from 19.5% at December 2005 to 21.3% at September 2006. Our mix of assets at the end of the year was 29% Cash Resources; 35.8% Government-backed and other Primary Securities; 23.2% Loans and Advances and 12% Fixed and Other Assets. Our prudent approach to risk will ensure that we maintain a strong and stable portfolio of assets and liabilities, and a level of liquidity conducive to efficient operations."
The Bank's deposit base, he said, grew by $4.4b or 16.3% for the year to $31.3b. This growth rate betters the 8.5% recorded in the banking sector at September 2006. The savings deposit category continues to record strong growth ($2.3b in 2006 versus $1.8b in 2005), given the rates of interest paid to customers. "Our share of total commercial banks deposits has increased from 19.2% at December 2005 to 20.2% at September 2006."
The CEO said total investments at the end of the year remained unchanged at $13.4b from December 2005. Local investments continue to be concentrated in Government Treasury Bills, the market for which remains extremely competitive given the high liquidity in the commercial banking system. During the year the bank purchased US$2m in tax-free bonds issued by the Berbice Bridge Company Inc. to finance the construction of the Berbice Bridge. These bonds were purchased from the two tranches on offer:US$1m for 12 years at 9% and US$1m for 15 years at 10%.
The bank also maintained a small portfolio of foreign securities as part of its objective to establish a flexible and stable financial structure by considering risk returns and yield differentials. Our investment in securities is guided by the investment policy under the guidance of an Investment Committee.
The loan portfolio before provisioning stands at $9.8B, an increase of $1.4B or 17.2% for the year. Growth occurred mainly in the construction and engineering and household sectors.
Credit quality improved significantly, Mr Sharma said, resulting in a 23.7% decline in the provision for loan losses. Non-performing loans at year end were 1.5% of the total loan portfolio as against 22.6% at the end of 2005. An analysis of the sub-sectors of the portfolio shows that the distribution sub-sector accounts for $2.3b (24%), the rice sector for $1.4b (14%), construction for $1.1B (12%), timber and sawmilling for $720m (7%) and entertainment (including hotels) for $590m (6%). The Bank's share of total commercial bank stood at 22.7% at year end.
The Commercial Banks are subject to the risk-based capital adequacy guidelines issued by the Bank of Guyana in keeping with the Based Convention. The guidelines evaluate capital adequacy based upon the perceived 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 risk-weighted assets of 8%. GBTI, the CEO said, remains well capitalized with the Bank's Tier 1 capital adequacy ratio, which is regarded as a measure of the quality of capital for financial institutions standing at 25.20% at December 2006. Total Tier I and Tier II capital was 25.20% of risk-adjusted assets at December 2006, compared to 31.21% at December 2005. This level, he said, is well over the internationally established ratio, and makes GBTI one of the highly capitalized banks in the local industry.
The bank will hold its annual general meeting on March 19, 2007 at the Le Meridien Pegasus Hotel.