Citizens Bank profits plummet during peak business season

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Citizens Bank Head office in Georgetown
Citizens Bank has reported that its profits plummeted by almost half during the peak business season this past year and for the first quarter of the 2017.
The distressing financial report was released by Citizen’s Bank today (Wednesday) which said the majority owned subsidiary of Banks DIH Limited recorded an after tax profit of $228M.
This is in comparison to the more than $440M it had earned during the corresponding period in the previous years.
The after tax profit earned by Citizens Bank represents a shortfall of 35 per cent over the previous year.
Chairman, Clifford Reis reported in the entity’s interim report for the six month period ending March 31, 2017 that interest income during the period amounted to $1.4B, while interest expense was $357.4M which resulted in a net interest income of $1B.
The Bank also earned another $237.6M through its returns on other investments, “resulting in a surplus before non-interest expenses of $1.3B compared to $1.4B for the corresponding period last year.”
Compounding the situation, Reis has reported too that Citizens Bank’s operating expense was $622.8M during this period, compared to the $621M it used the previous year.
It was reported that at the end of March this year the Bank’s net loans and advances balance was $28.6B which compares to $29.4B in the previous corresponding period.
The Bank also took another hit on its impairment of its assets. The Citizens Bank Chairman reported the net impairment on financial assets stood at $176M compared to $64.7M in the corresponding period.
There was not much movement in the bank’s total deposits which moved marginally from $38.3B to $39.4B during the corresponding period.
Citizens Bank is majority owned by Brewery Giant Banks DIH Limited with minority partners being, Continental Agencies Limited, Hand in Hand pension Group Scheme and the Hand in Hand Group.
Only recently questions were raised over the financial strength of Citizens Bank when financial analysts questioned why Banks DIH would want to approach a competitor Bank—Republic Bank Guyana—to secure a large loan.
Banks DIH Limited, the Guyana based brewery giant recently put up a number of its properties and brewery equipment as collateral in order to secure a loan debenture from Republic Bank.
This obtained mere months after Chairman Clifford Reis, announced a reduction in the company’s loan portfolio and a major buy back of shares looking to retake control of the Barbados operations.
The move had raised eyebrows among financial analysts, some of whom point to the declining state of affairs of the Guyana economy and to the fact that the debenture/loan is being secured at Republic Bank Guyana, while Banks DIH is the majority owner of the Citizens Bank.
Financial analysts weighing in on the transaction opined that while it is a standard practice in business for organizations to have to put up collateral for new loans, the fact that the loan is not being secured from Citizen’s Bank—which it owns—begs the question as to why, given recent statements by Chairman of the Board of Director, Clifford Reis about the health of the company.
The company recently held its Annual General Meeting (AGM) for 2016, where Reis reported that Banks DIH’s debt portfolio had actually gone down for the financial year ending September 30.
“What could have happened in the last six months for them to go to the market to borrow new debt?” questioned one analyst.

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