The New Building Society Limited has recorded its highest-ever profit in the year 2010 Gy$577 million. This represents a Gy$9 million increase over the previous year, Chairman of the Board of Directors, Dr Nanda Kishore Gopaul, told members at the society’s Annual General Meeting, held at the Umana Yana in Kingston on Saturday, April 30.
At the meeting, a motion to raise the lending ceiling from Gy$12 million to Gy$15 million was proposed and seconded by the society’s membership, and will now be sent to Finance Minister Dr Ashni Singh for approval before the society can offer the new consideration to its customers.
At the meeting, Dr Gopaul declared that, despite the economic downturn, the positive macro-economic indicators achieved served to overcome some of the vulnerabilities of the local economy.
The NBS has a huge investment portfolio in treasury bills, Dr Gopaul stated, adding that some aspects of the society’s operations have been affected by the drastic reduction in interest paid on government of Guyana treasury bills, where the bulk of the funds in the form of mortgages are invested.
However, investment in the Berbice River Bridge Company Inc continues to yield the most lucrative returns, earning interest at a rate of 9.56 per cent per annum.
To date, the society has received returns totalling Gy$405 million, or 22 per cent of the Gy$1.8 billion that it invested in the bridge. This is the highest rate of return on any of the society’s investments.
The chairman said the quality of the society’s loan assets continues to be excellent, as the society experienced a 0.4 per cent level in arrears in the area of home loans. The bank reduced the interest rates for mortgages in October 2010, to encourage home ownership and also to encourage repayments.
CEO, Ahmad Khan
For the year, mortgage advances in the sum of Gy$2,948 million was disbursed. The society currently has more than Gy$21.6 billion in mortgages countrywide. Gopaul said the society is capitalising on the Housing and Water Ministry’s newest phase of development on the East Bank Demerara corridor. The New Building Society’s main activities are in the line of home ownership financing.
In his address, the Chief Executive Officer of NBS, Ahmad Khan, said that, in 2010, the society’s investors fund grew by Gy$3.358 billion, compared to the growth of Gy$1.781 billion reported for the previous year — an increase of 89 per cent. Khan attributed this enormous growth to the confidence and support of customers and members.
Total assets of the society grew by 10 per cent to Gy$41,831 million; while reserves stood at Gy$5,935 million, representing 14 per cent of total assets.
The society’s financial position is sound, the CEO pointed out, adding that liquid assets of the society totalled Gy$16,045 million at the end of 2010, an increase of 24 per cent from 2009. Khan said the level of liquidity is way above the norm in the banking sector, and therefore provides assurance that funds would always be available to meet demands of members.
Under the Financial Institutions Act 1995, the New Building Society is required to maintain a capital base of not less than eight per cent of its weighted risk assets, although international norm averages around 15 per cent. The weighted risk is based upon the perceived risk associated with the balance sheet risk adjusted assets.
The society’s capital adequacy ratio for 2010 under Tier 1 was 33 per cent; while the total for both Tiers I and II was 36 per cent, which is sufficient to cushion any unforeseen financial disaster, Khan said. This amount, he added, is amongst the highest averages in the banking industry.
The New Building Society Limited came under scrutiny for its investment in the Berbice River Bridge Company Inc at a time when the world was experiencing an economic meltdown.
However, the board of directors of the society at the time held strong to their investment choice. Both the chairman of the board and the CEO stated that the society was optimistic that its sound business practices would ensure growth in the next year.
The NBS has a huge investment portfolio in treasury bills, Dr Gopaul stated, adding that some aspects of the society’s operations have been affected by the drastic reduction in interest paid on government of Guyana treasury bills, where the bulk of the funds in the form of mortgages are invested.
Comments are closed.