…chairman says loan portfolio sound despite challenges

CITIZENS BANK recorded a 51.6 per cent increase in profit after tax, despite being faced with a number of challenges on the economic front, Chairman Clifford Reis stated in the bank’s 2017 annual report.

The bank held its Annual General Meeting Tuesday evening at the Georgetown Club. Reis said the financial institution recorded a profit after tax of $726.6M in 2017 when compared to $479.1M the previous year, representing an increase of $247.4M or 51.6 per cent.

“During the year, cognizant of the ongoing challenges in our operating environment, which challenges included underperforming economic sectors, an increasing level of non-performing loans, slow projects implementation, high liquidity and a reduction in the availability of foreign currency, emphasis was placed by the bank on improved risk management and asset maintenance and cost control, the result of which was pivotal to the performance reported,” Reis explained.

At September 30, 2017, Citizens Bank net income stood at $2.9B compared to $2.6B the previous year – an increase of $0.3B or 11.5 per cent. Profit before taxation was $1.2B compared to $0.7B in 2016 – an increase of $0.5B or 71.4 per cent. “During the year, total revenue grew by $0.3B or 9.0 per cent to $3.6B or 9.0% to 43.6B while our balances for total assets, loans and deposits declined marginally,” the Chairman noted.

Reis said while Citizens Bank’s loan portfolio remains “sound,” it was impacted due to the financial challenges faced by citizens. “…the various challenges experienced by our customers because of the decline in business activities during 2017 remain and continue to impact the performance of our overall portfolio,” he explained. At September 30, 2017, non-performing loans represented 13 per cent of the bank’s total loan portfolio compared to 15.5 per cent at September 30, 2016. It was noted that the consolidated banking sector ratio for non-performing loans was 13.2 per cent at September 30, 2017.

Reis said though the country’s economy and financial environment is expected to be characterized by many of the factors that existed in 2017, the bank remains hopeful that early implementation of the 2018 budgetary measures, and improved implementation of the Public Sector Investment Programmes (PSIP) will energize business activities, thus creating opportunities for growth.

“Our initiatives will therefore have to focus on utilizing those opportunities to ensure that we offer to our potential and existing clients unmatched products and customer service,” the Chairman said.

Additionally, he noted that continued emphasis will be placed on improving the bank’s assessment and management of risk, thereby ensuring that the best quality of financial assets are placed on the books, the management of expenses through operational efficiencies and customer relationships. Pointing out that Guyana’s economy is projected to grow by 3.8 per cent in 2018, Reis said Citizens Bank remains committed to the development of the banking sector and the economy, despite the anticipated challenges.

“The bank is confident and firm in its belief that the successful implementation of our strategies for growth will enable us to achieve an improved performance for our stakeholders,” the Chairman stated.

Citizens Bank Managing Director Eton Chester, in his report, also took note of the $247.4M increase in profit after tax. Chester explained that earnings per share were $12.2 compared to $8.1 in 2016 while book value per share increased by 8.1 per cent to $138.1 as at September 30, 2017 from $127.7 the previous year.

Turning his attention to loans and advances, the Managing Director experienced a marginal decrease. “Net loans and advances were $28.2B at September 30, 2017 compared to $29.2B for the prior year,” he explained. However, he pointed out that in 2017 growth was recorded in lending to manufacturing and construction sectors which grew by 23 per cent and 5.3 per cent.

“During 2017, the yield recorded from our loans and advances was 10.3 per cent, a marginal change from the 10.5 per cent obtained in 2016. Income from loans and advances represented 97.7 per cent of interest income in 2017, compared to 98.5 per cent in 2016,” he explained.
It was noted too that loans and advances accounted for 87.0 per cent of earning assets and 56.4 per cent of total assets compared to 95.7 per cent and 58.1 per cent respectively in 2016.

Zooming in on the bank’s human resources department, Chester said in 2017 employees were exposed to both in-house and externally held training in Customer Care, Internal Audit and Compliance, Anti-money Laundering activities, investments and credit management and supervisory skills to ensure that they are adequately equipped to provide a consistently high level of service to stakeholders.