Republic Bank (Guyana) Ltd has recorded an after-tax profit of $1.92 B profit this year down slightly from the $1.98 B it notched up in 2010. The profit reflects a 2.7 percent reduction over the figure recorded in 2011.
$850M is being paid out as dividends. Earnings per stock unit fell to $6.43 from $6.61.
Managing Director John Alves linked the reduction in profit particularly to a more cautious approach by consumers. “While the local economy remains not directly vulnerable to the global fallout, increased liquidity, reduced/limited investment opportunities and incoming foreign remittances continue to influence levels of business, more particularly in the area of lending, as consumers assume a more cautious approach,” he said. Further, he noted that “the environment of excess liquidity also impacted foreign exchange selling rates and net interest margins” , but said that Republic Bank, through effective management of resources and operating expenses was able to navigate a challenging year.
According to the bank’s annual report, the decline in profitability was as a result of a decrease in other income, mainly in the area of foreign trade, as well as in increase in operating expenses partly due to branch expansion during the fiscal year. Additionally, corporation tax paid during the year amounted to $1,546M compared to $1,257M the previous year. The bank’s financial year ended on September 30, 2011.
Net interest income was pegged at$4.8B exceeding the amount earned in 2010 by $146M. This, the bank said, is attributed primarily to the increase in the lending portfolio and tight management of interest expense. However, interest paid on deposits for the year totaled $890M, less than the $922M in 2010.
The bank said that “other income” amounted to $1.8B and contributed 24% of total income, fell below the 2010 amount of $1.9B by $73.9M (4.2%). Continued emphasis on foreign exchange trading resulted in exchange gains for 2011 totalled $1,108M, down by $28M over the figure recorded in 2010. “Exchange earnings continue to be the main source of Other Income, contributing 60.9% of the total.
Meanwhile, the bank’s total assets at the end of its financial year were pegged at $103.9B which represents an increase of $8B over the 2010 figure. Of this $8B, loans and advances accounted for an increase of $4.5B while the available-for-sale investment securities and treasury bills accounted for the remaining $3.5B.
In terms of advances, the home mortgages sub-sector shot up 30.3% from $6.6B to $8.6B. “We continue our efforts both to join with the government in facilitating home construction and ownership and to take advantage of the available tax benefits”, Alves said in his discussion and analysis.
The bank said that its asset growth was funded mainly from deposits, with the bank’s overall portfolio reaching $91,872B. This represented an increase of $7.7billion over the 2010 figure. “This increase is in line with the rest of the industry and well above the growth in the economy and the rate of inflation,” the Bank said. “Savings deposits, the most stable category of deposits at 69.5% of the deposits’ portfolio, grew by $2.7B or 4.5%,” the bank said. Meanwhile, the Certificate of Deposit portfolio declined modestly by $72 million or 1 percent compared with growth of $163M or 2.3 % in 2010.
In his future outlook, Alves said that while competition is keen in the banking sector, opportunities for growth and increased profit continue to exist. He said the bank expected a continuation of aggressive competition which could further erode net interest margins.
He added “we remain optimistic that Guyanese people will remain focused on the political and social stability necessary to improve living standards for all. The government’s ongoing drive to improve the country’s housing sector is noteworthy, and we are hopeful that an improved economic, social and political climate will provide the enabling environment for Guyanese people and all sectors of the economy to grow”.
The Bank held its Annual General Meeting (AGM) on Monday at the Pegasus Hotel.