Citizens’ Bank records $124M drop in profits … high level of non-performing loans in banking sector … new branch for Mandela Avenue

Jan 23, 2019 News

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Citizens’ Bank recorded a profit of $602.3M in profit after taxation for fiscal year 2018, as opposed to the previous year, which saw the bank gathering $726.6M in profit after taxation. This represents a profit drop of $124.3M.
The bank’s Chairman, Clifford Reis, noted this at the bank’s annual general meeting yesterday at its Camp & South Road office. He said that the drop should be considered in the context of knowledge of the fact that the bank benefited from a one-off transaction in the fiscal year 2017, the after-tax results of which increased the bank’s net profits by $210.3M.

Citizens’ Bank recorded for the fiscal year 2018, a net income of $2.7B, compared to $2.9B in the prior year, with a profit before taxation of $1B, compared to $1.2B in the previous year.
Total revenue for that fiscal year, sits at $3.2B, with balances for total assets and deposits experiencing marginal growth.
Reis said that the bank’s loan portfolio continues to be relatively sound, but noted challenges experienced by customers in 2018 that impacted the bank’s overall portfolio. Non-performing loans at September 30, 2018 represented 11.7% of the bank’s total loan portfolio, compared to September 30, 2017.
Reis highlighted focused efforts of the bank to improve its risk management as well as asset maintenance.
In 2017, the bank’s shareholders benefited from a dividend of $2.70 per share, paying an interim dividend of $0.70 per share in May, 2018. Now, the directors recommend a final dividend of $1.80 per share, bringing the total dividend payment to $2.50 per share, for a total payout of $148.7M.
The bank’s board of directors is headed by Reis, who is the Chairman and Managing Director of Banks DIH Limited. Other board members are Eton M. Chester, George G. McDonald, Michael H. Perreira, Paul A. Carto, Wilfred A. Lee, Rakesh K. Puri, Deenawati Panday and Ronald Burch-Smith.

DEVELOPMENTS IN THE SECTOR
Reis said that the local banking system remained relatively sound, despite the high level of non-performing loans, with other commercial banks and other licensed depository financial institutions reporting higher capital and profits respectively.

The consolidated average capital adequacy ratio, which is a measure of a sector/bank’s capital to its risk, was computed at 30.6%, comfortably above the optimal benchmark of 8.0%
The sector’s total loans and advances grew by 5.0% to $227.2B at September 30, 2018, with credit to the private sector credit increasing by 4.8% to $226.0B.
The bank’s annual report noted an 8.0% increase in deposits at commercial banks to $396.7B as of September 30, 2018, with private sector deposits growing 7.0% to $316.5B; accounting for 79.8% of total banking sector deposits.
Reis said that the banking sector continues to report high levels of liquidity. To sterilise this liquidity, the bank prefers the utilization by the Bank of Guyana of the auction of Treasury Bills, through its open market operation. At September 30, 2018, outstanding Treasury Bills totaled $71.1B, with commercial banks holding $57.5B or 80.9%.
The operating environment continued to experience many of the same challenges as the prior year, such as underperforming economic sectors and delays in projects implementation.

INITIATIVES FOR FISCAL YEAR, 2019
Citizens’ Bank intends to harness the efficiencies derived from investment in technology to deliver new products and services to its customers, since the introduction and upgrades of a number of technology driven services in 2018 was noted to have improved the operational performance of the bank.
The bank’s annual report notes that developments in the oil and gas sector, along with early implementation of the 2019 budgetary measures and improved implementation of the public-sector investment programs, will create opportunities for the bank and other non-energy entities.

Hence, Reis pointed out that the bank’s initiatives will focus on utilizing those opportunities to offer potential and current clients’ unmatched products.
Reis told the gathering of stakeholders that the bank’s 2019 plans are to ensure the mitigation of operational inefficiencies and the strict adherence top robust risk-management policies and practices, assuring the growth, competitiveness and stability of the bank.
Human Capital was lauded as Citizens’ principal asset. Hence, the bank intends to place great emphasis on the strengthening and improvement of its Human Resources Management capacity, so clients benefit from a high level of customer relationships.

NEW OFFICE BUILDING AT MANDELA AVENUE
Chairman Reis indicated that the fiscal year 2019 will see the commencement of construction for a modern office building. Reis made the announcement at annual general meeting, yesterday, that edifice will be a relocation of the Thirst Park branch.
The new bank will be situated at the end of Mandela Avenue, between Aubrey Barker Road and David Rose Street. The branch is being constructed in keeping with the bank’s promise to provide an enabling environment to its customers.

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