Improved performances in some areas but GBTI saw drop in revenue earning opportunities - Isava
While GBTI’s performance saw improvements in 2019 in key areas there was an overall decrease in revenue earning opportunities given the economically challenging environment, according to the Bank’s Executive Director, Richard Isava in his report to shareholders.
The Guyana Bank for Trade and Industry (GBTI) registered an after-tax profit of $1.48b for the year ended December 2019, a rise of 2.59% over the 2018 figure of $1.44b.
According to the bank’s audited financial statement published in the May 11 edition of Stabroek News, interest income rose from $4.60b to $4.77b. The interest expense declined from $766.8m in 2018 to $763.1m last year. Net interest income for 2018 was $3.84b in 2018 compared to $4.01b
Operating expenses climbed from $3.4b in 2018 to $4b last year. There was a significant improvement in loan recoveries. Whereas an allocation of $116m was made for loan provisioning net of recoveries in 2018, a net recovery of $19.2m was made for 2019.
Basic earnings per share in dollars was 36.15 for 2018 and 37.09 for last year.
In his report to shareholders contained in the bank’s annual report, Isava, who also cited the major challenge posed by the COVID-19 pandemic, said “In an economically challenging environment that has been subdued by constitutional uncertainty; there was an overall decrease in revenue earning opportunities for the bank. Some of our outlying branches have had to grapple with economic stagnation in those areas and low banking penetration in others. Increased liquidity has compounded the operating environment”.
The Bank’s 2018 results were impacted by the default of the Government of Barbados which stopped payments on its external debt. Isava in his 2019 report said “During the year; the debt restructuring of our Barbados debt was concluded and resulted in haircuts of 23% of our exposure”. Loans and advances continued to be the main income earner for the Bank at 49%. Total loans and advances were $39.6b as at year end, a drop of 8% “as the bank continued its efforts to rationalize the portfolio prudentially”.
Isava said that the bank’s loan portfolio has been concentrated in the business sector over the years. He said that strides have been taken to reduce this and broaden its retail portfolio.
He added that the bank’s nonperforming assets while stable remain an area of concern. “The state of the local economy as well as the backlog in judicial matters have slowed down remediation activities. The bank remains resolute in its efforts to remediate these exposures…”
Isava disclosed that the bank had decided to discontinue the gold operations arm of GBTI Properties Holdings Inc.
“While profitable; the returns did not compensate for the risks undertaken”, Isava stated.
He noted that in a highly liquid environment interest rates have dropped and interest spreads continued to narrow.
“The yield on one-year Treasury Bills trended below 1% for the first time in more than ten years. Holdings of Treasury Bills by all commercial banks grew by 20% in 2019”, he added.
In his look ahead, Isava said “Guyana could experience unprecedented real GDP growth in the next 18 months as energy production and investment ramps up following the country’s first export of crude oil in 2020”.
He added that the extractive sector will drive significant hikes in private consumption and investment despite the country’s weak business environment. Growth, he said, is also expected to be adversely impacted by the high uncertainty surrounding the COVID-19 pandemic.
The Bank’s AGM has been scheduled for August 28, 2020 at its Kingston Headquarters at 6 pm.
The Directors have recommended a dividend of $10 per share of which $4 has already been paid.