Commentary
The impressive results have made it possible for the dividends paid to shareholders to revert to the level of 2000 after having been reduced in 2001. The total amount paid out is $45M. representing 41% of the current year profits available for distribution. Since the Bank is a private company, the market value of the investment cannot be determined and it is therefore not possible to assess what the $0.10 per share represents as a real return to shareholders.

Despite the fairly substantial increases in interest earning assets, of which loans and advances and securities constitute the largest stake, interest income of $1,066M for the year was almost identical to the preceding year. Average interest charged on the performing loans and advances (19.28%) was the highest among the four banks for which detailed financial statements are available while the average interest earned on investments was 6.58 per cent. Interest expenses amounted to $709.9M or 6.5% on average total deposits, also high by the standards of the competitors.

The provision for loan losses increased during the year by $81.5M while the portion of the Bank's loan portfolio which is non-performing decreased by $417M or 20% (incorrectly shown in the Chairman's Report as 24%). As a percentage, non-performing loans make up 26% of the total loan portfolio compared with 31% for the previous year. Among the other banks, Citizens Bank was 8.8 per cent, GBTI 49.3% and NBIC 27.8 per cent.

Note 4 to the financial statements indicates a specific charge of $158M and write back of $77M on loan loss provisions, but it is not clear from the income statement where the net write-off has been charged. The three non-interest expenses are premises, personnel, and administration all of which would be inappropriate as a heading under which to charge write-off of loan losses. Equally unclear is the decline of over $92.8M in administrative expenses of which no details are given in the statements.

The Chairman described the reduction in the credit deposit ratio from 70.6% in 2001 to 50.4% in 2002 as "quite an improvement in liquidity" which makes one wonder what target the Bank has set on the proportion of its deposits which it would like to convert to loans - a main function of a commercial Bank.

Deposits have increased from $8.9B to $11.7B, an increase of 31.5% which the Chief Executive reports as enhancing the Bank's "market share considerably in Guyana." The reality is that market share has risen from 9.58% to 11.39% which could hardly be described as considerable. Such extravagant language is a feature of annual reports in Guyana and BP has drawn attention over the years to numerous misstatements none of which companies have found it necessary to correct.

The spread of deposits is quite interesting with professional services accounting for some 58% of the Bank's total deposits. This is not a category usually identified as a deposit-making group, is unique among commercial banks in Guyana and does not appear in the deposits table of the Bank of Guyana Statistical Abstract.

Financial highlights

The following table represents the Bank's highlights for the year:

                                                    2002     2001 


                                                     $M        $M 


Net income before taxes                              249      202 


Net income after taxes                               129      107 


Total assets                                      13,911   10,938 


Total deposits                                    11,719    8,914 


Loans and advances (net)                           5,919    6,290 


Returns on average assets (%)                       2.01     1.84 


Return on average equity (%)                        2.63    11.06 


Earnings per share $                                0.29     0.24 

Auditor's Report
Unlike the auditors report on the GBTI's financial statements reviewed in this column last week auditors, Nizam Alli and Company specifically referred to International Standards on Auditing as well as International Accounting Standards in their report. Poor John Bahadur and Savitri Thomas must be completely confused as to the inconsistencies in audit reports and financial statements published in Guyana. Surely it is time that the ICAG resolve the confusion in the public interest which must be its primary objective. No wonder the United States of America has under the Sarbanes - Oxley Act taken away from the auditing profession the right to set Auditing Standards.

Annual Report
The quality of the annual report seems much more modest than before but still contains too many photographs and too little relevant information.

Conclusion
Banks hold a special place in any economy and it is good to see them succeeding. However it is equally important that they show some lead in good corporate governance including reporting and disclosures. BP restates comments made last year:

"The Bank of Guyana must be aware that the accounting profession in Guyana is extremely weak and the BoG must question the extent to which the profession can be relied on to ensure compliance by financial institutions with the law. Its inspectors need to ensure that the standards are uniformly applied and that anomalies are properly investigated. They need to monitor the policies and procedures applied by licensed financial institutions and to pay careful attention to [their]... publications..."