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Annual Report
Managing Director's Report

 

OVERVIEW

The year 2005 has proven to be another challenging one both within the banking industry and generally in the country.

I am pleased to report that 2005 was a very good year for the company. For this we thank our loyal and dedicated employees, customers and shareholders.

 

INCOME FROM LOANS & ADVANCES AND INVESTMENTS

Interest Income was $951.5 million for the year; compared to the previous year, this represents an 11.23% increase.

Yield on loans and advances during the financial year was 10.65% compared to 11.40% the previous year, reflecting the Bank’s policy of offering competitive pricing on its products. Yield on investments was 7.37% compared to 8.20% the previous year, reflecting the general trend of lower rates on new investments.

Net Interest Income was $613.2 million for the year; compared to the previous year, this represents a 2.81% increase. Other Income was $243.1 million, resulting in a surplus before non-interest expenses of $856.2 million; this represents a 9.02% increase on the previous year.

NON-INTEREST EXPENSES

Non-interest Expenses were $452.3 million in 2005; this represents a 14.05% increase on the previous year. We remain committed to the prudent management of our operating expenses and continually seek opportunities to improve on efficiency.

PROVISION FOR LOAN LOSSES

Asset quality remained a strength of the company. Non-performing loans totaled $289.4 million at year-end 2005, representing 4.79% of total loans, down from 5.83% a year ago. At September 30, 2005 the total provision was $117.9 million which was equivalent to 1.95% of total loans. Delinquency and charge-off ratios continued to be well below industry average.

NET PROFIT AFTER TAXATION

After Tax Profit for the year 2005 was $345.5 million; compared to the previous year, this represents a 24.12% increase. After transfers to statutory reserve, general banking risk reserve and dividends, retained profits for the year was $231.9 million, compared with $153.3 million in 2004.

RETURN ON AVERAGE EQUITY

Return on shareholders’ equity was 24.84% for the year 2005, up from 24.55% in 2004. Earnings per share were $5.81, up $1.13 or 24.15%, compared with $4.68 in 2004.

RETURN ON AVERAGE ASSETS

Average interest-earning assets increased by 30.10% to $11.5 billion, compared with $8.8 billion in 2004. Return on average assets was 2.46%, up from the 2004 return of 2.41%.

DEPOSITS

Deposits increased from $9.9 billion to $13.4 billion, an increase of 34.51% for the year. The average rate of interest paid on deposit accounts was 2.88%, down from 3.00% in 2004. The increase in the customer deposit base was primarily employed in our investment and loan portfolios, up on the previous year by 35.15% and 25.67% respectively to $5.5 billion and $5.9 billion.

LOANS & ADVANCES

Loans & Advances increased from $4.7 billion to $5.9 billion, an increase of 25.67% for the year, despite the weak demand for credit by the private sector. Loans and advances accounted for 37.4% of total assets and 49.60% of total income.

INVESTMENTS

Investments increased from $4.1 billion to $5.5 billion in 2005, an increase of 35.15%. Income from investment accounted for 30.00% of total income in 2005, compared to 28.70% in 2004.
The investments portfolio comprised mainly Government of Guyana Bonds and Securities issued or guaranteed by Caricom Governments.

TECHNOLOGY

Technology continues to provide the foundation and tools for the provision of quality service to our customers. Citizens Bank continues to offer a wide range of technology driven products including full function telephone banking, remote banking, cash management, bill payment and automated payroll services.

The addition of three strategically located ATMs to our network provides our customers with additional access points for cash, bill payments and inquiry functions.

TECHNOLOGY

Our Intel machines were completely upgraded to better process the increasing volume of transactions and decrease the time taken to complete individual transactions. Our infrastructure is strategically positioned to leverage new technologies and introduce cutting edge financial products and services.

THE FUTURE

We continue to develop an in-depth knowledge of our customers and their needs as we focus on the future, with advanced technology and expanded product line with products tailored to our customers’ needs.

We will continue to enhance the quality of our human resources which will enable our employees to better serve each other and our customers.
Our community activities will remain a priority as we recognize our responsibility to give back to the communities in which we operate.

We will continue to strengthen our activities in Risk Management to better manage and reduce market, credit and operational risks, with close collaboration among the MIS, Legal and Compliance Departments.

APPRECIATION

On behalf of management, I would like to express appreciation to the Board of Directors for their support and oversight. We look forward to another good year in 2006.