In its annual report for 2009, the bank revealed that net mortgage advances for the 2009 financial year totalled $5.08 billion compared to $4.06 billion last year – a 24.86% increase.
This trend came amid increased focus by the government on the housing sector and the increase in the ceiling for low income mortgage loans.
Earlier this month, the Guyana Association of Bankers (GAB) said that the decision of the Guyana government to increase the ceiling for low income mortgage loans was a welcome one. It said the increase recognized that the cost of building a low income house had gone beyond the ceiling of $3 million set in July 2009.
Persons qualifying for such loans will have greater access to mortgage financing nationwide up to $8 million to build their homes at the low income mortgage rate previously offered only by the New Building Society
Overall, Republic Bank’s advances rose by $1.72 billion or 7.95% to $23.3 billion. Retail lending rose slightly from $3.15 billion to $3.26 billion and corporate and commercial lending from $14.3 billion to $14.9 billion. There was no indication of how much was advanced to the agricultural sector. In recent years across the banking sector, the number of loans to the agricultural sector has dropped.
The bank, which returned a profit for 2009 of $1.8 billion after tax compared to $1.5 billion the previous year, also saw healthy growth in its `Other income’ segment particularly as a result of exchange trading gain.
The bank in its annual report included a novel, seven-page `Management Discussion and Analysis’ of the accounts which pointed out that “continued emphasis on foreign exchange trading resulted in gains for 2009 of $1,132 million, an increase of $112.0 million or 10.98% over 2008”. Exchange earnings were the main source of other income – constituting 63.38%.
By comparison, the gain on foreign exchange trading exceeded the bank’s interest expense of $1.014 billion in 2009. Republic Bank’s interest expense in 2008 was $1.3 billion.
As a result, the bank’s net interest income for 2009 was $4.41 billion which was 22.21% higher than the $3.61 billion figure of 2008. Republic Bank credited these better figures to “the increase in the lending portfolio and tight management of interest expense”. It said the interest paid on deposits for 2009 was lower as a result of “the Bank’s conservative approach to deposit pricing and growth because of the limited lending and investment opportunities”. Other income accounted for 28.8% of the bank’s net income.
In terms of investment, the report said that almost 50% of the bank’s interest earning assets at the end of the financial year comprised of Government of Guyana Treasury Bills. T-bills registered an 8.15% growth or $3.27 billion over the previous year. The report said, “This increase was negated by a reduction in other investment securities which consist of both overseas and locally originated investments, from $11.49 billion to $11.20 billion, highlighting the paucity of attractive investment opportunities, both locally and overseas”.
The report added that the average rate of return on the available-for-sale investment securities was 5.29% per annum.
The bank’s ratio of non-performing to performing loans improved to 1.9% from the previous year’s 3.07%. In 2009, expenses tied to loan-loss provisioning amounted to $91.18 million compared to a write-back of $17.56 million in the previous year. Republic said that this was due to the bank adopting a “very prudent position especially on its unsecured consumer lending portfolio”. The bank’s recoveries on loans that were previously written off totalled $132 million in 2009. In 2008, the figure was $103.1 million.
During 2009, the report noted that 749,800 of the bank’s stock was traded on the Guyana Stock Exchange at prices of $40 to $47.50, the average weighted price being $43.20.
In terms of related parties, the accounts reflect transactions with the CL Financial Group. CL, which holds shares in Republic’s parent company had to be bailed out by the Trinidadian government earlier this year. In terms of loans investments and other assets, there was a sum of $4.6 billion showing for 2008 but zero for this year.
In terms of deposits and other liabilities there was a figure of $557 million for CL for 2009 compared to $70.3 million the previous year.
In terms of interest and other income there was a figure of $142 million for CL compared to $502 million in the previous year. In relation to interest and other expense (excluding key management compensation) there was a figure of $1.301 billion listed for CL for 2009 compared to $1.370 billion in 2008.
