Republic Bank profit up 14.4%

-sale of fixed asset led to extraordinary gain, credit loss provision rises

Richard Sammy

Republic Bank (Guyana) Limited registered an after tax profit of $3.134b for 2018, up by 14.4% compared to $2.73b last year.

The Trinidad and Tobago-headquartered bank’s Managing Director, Richard Sammy in his discussion in the bank’s annual report noted that the rise in profitability was attributable to normal banking operations and an extraordinary gain from the sale of a fixed asset.

Net interest and other income rose by $905.1m or 9.38% to $10.55b this year compared to the $9.65b last year. This, he said, was attributable to the increase in the loan portfolio and the sale of a fixed asset.

Other income, he said, totaled $3.15b or 28.34% of total income. This was above the 2017 figure by $630.7m or 25%.  He said that foreign exchange trading increased and this led to exchange gains of $1.399b for 2018 and represented a hike of $204.8m or 17.15% over last year. He added that exchange earnings continue to be the major source of other income.

Interest expense dropped from $575m in 2017 to $570m this year.  The Managing Director said this was a result of the bank continuing to manage its assets and liabilities in an environment of inadequate investment openings.

Sammy, who is now into his fourth year as Managing Director, said that the ratio of the bank’s average interest earning assets to average customer deposits remained stable at 87.39%.

“This reflects the Bank’s policy of managing customers’ deposits in a challenging environment where investments and lending opportunities are relatively scarce”, he said. Sammy pointed out that at September 30, 2018, the end of the bank’s financial year. 31.80% of the bank’s interest earning assets comprised Government of Guyana Treasury Bills.

He stated that Return on Assets rose to 2.02% and the Return on Equity to 16.48%. Earnings per stock appreciated from $9.13 to $10.45.

Total dividends paid and proposed for fiscal 2018 amounted to $1.285b and translates to a dividend payout ratio of 42.92% in 2018 compared to 45.18% last year.

Non-interest expenses increased by $469.3m or 8.65% over 2017 mainly as a result of staff costs which rose to $2.415b.

Credit loss provision

The Managing Director said that the financial statements included an expected credit loss provision on its performing loan portfolio of $319.5m at September 30 this year. He added that at September 30, 2018, the specific provision on non-performing loans totaled $482.7m, a decline of $106.7m over 2017.

“Overall in 2018, expenses related to expected credit loss provisioning amounted to $885.4 million against a provision of $675.7 million in 2017”, Sammy disclosed. He said that recoveries on loans that were previously written off amounted to $206.9m this year.

Advances rose by $8.9b to $69.7b, an increase of 14.73%. Sammy said that the bank’s investment in agriculture “remained at a minimum as it continues to reassess the position as circumstances change”.

The mortgages sub-sector saw a 9.53% rise in loans to $25.4b.

In his review, Chairman, Nigel Baptiste said that as Guyana prepares for first oil, Republic Bank “is committed to supporting this emerging sector as well as Government-led initiatives to diversify some of the traditional sectors of the economy”.

Republic Bank will hold its AGM on December 10th at the Pegasus Hotel at 3 pm.

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