The local financial sector is reporting lower-than-expected earnings and despite Government’s assurances,
GBTI Chairman Robin Stoby
the effects of a progressively worsening economy has forced local banks to revise their projections for the remainder of the year to accommodate a continued bleak performance.
At least three local operated major financial institutions over the weekend released their Financial Statements, namely Republic Bank, Guyana Bank for Trade and Industry (GBTI), and Hand in Hand Trust Corporation.
GBTI Chairman Robin Stoby has since criticised the performance of the economy as ‘sluggish’ in face of an early budget that has since failed to deliver on its expectations.
According to Stoby, “in spite of the exceptionally early presentation of the National Budget in January of this year, the expectations and confidence that usually follow and flow out of the fiscal policies of such a budget have not been manifested in this instance so far…As a result, the economy continued to display a sluggishness throughout the first half of the year.”
He cited among the reasons for the poor economic performance, the loss of the Venezuelan market for Guyana’s rice, which has since been compounded by unfavourable world market prices.
The bleak performance of the sugar industry – another of the traditional economic pillars – has also been factored into Stoby’s report on the bank’s performance.
According to the chairman of the GBTI board of directors, “sugar production was just marginally below its target for the period, but with the world market price for sugar being less than the cost of production, its contribution to GDP has not improved.”
Additionally it was found that the housing sector, which provided a stable lending opportunity for the banking sector in recent years has also levelled out, no longer providing the buoyancy it once engendered.
Stoby spoke too to other external factors that will also tentatively affect the banking sector in the near future, such as the loss of its correspondent bank – The Bank of America – and Brexit, among other factors, which, taking local circumstances into account, “require us at GBTI to exercise more dexterity than ever before, in navigating the bank’s path to continued growth and stability.”
The board has since approved the payment of dividends to its shareholders at $6 per share, on the basis of a net profit after tax of $961 million for the first half of the year.
Meanwhile, such was the performance at Republic Bank, its Chairman Nigel Baptiste in his statement to shareholders has indicated “…there are no extraordinary gains expected for the remainder of the year.”
Republic Bank has in fact recorded an after-tax profit increase of less than US$1 million for the first half of 2016.
According to Baptiste, the bank recorded an after tax profit of $2.1 billion. This, he said, represents an increase of only $188 million over the corresponding period in the previous year. The bank had earned some $3.3 billion but had to fork over $1.2 billion in taxes.
The Hand in Hand Trust Corporation over the weekend also released its financial statements for the year ending June 2016.
According to Chairman Paul Chan-a-Sue, that institution while holding some $7.6 billion in deposits, managed to rake in an operational profit of $79 million.
It was reported too that Hand in Hand Trust Corporation’s total expenditure for the period was $330 million out of its gross income of $409 million.
The corporation had earned in excess of $650 million last year while its total expenditure exceeded $330 million.
According to the World Bank figures, between 2005 and 2013, the Guyana economy grew by 4.7 per cent on average each year.
This, however, decelerated to 3.8 per cent in 2014 and to 3.0 per cent in 2015, as commodity prices collapsed for Guyana’s major exports.
The World Bank in a recent assessment of Guyana’s economic performance had found that uncertainty surrounding the 2015 elections also contributed to slower growth.
It was noted that the increased production of gold (two new mines opened in 2015), rice, and sugar compensated for lower global prices and balanced out contractions in construction, forestry and bauxite production.
The economy is expected to grow by around 4 per cent in 2016 and 2017. The World Bank has since projected that most of 2016 growth is expected to come from continued rapid growth of gold production and rebounding performance in construction and wholesale and retail trade industries.
