Aug 2015 Financial News

Republic Bank prepared for slide in Suriname dollar

Aug 17, 2015

On August 4, the day after Republic Bank started operating the bank it acquired in Suriname from RBC Royal Bank (Suriname) NV at a cost of US$39.8 million, nine questions were sent to the bank’s managing director David Dulal-Whiteway and the deputy managing director, Nigel Baptiste.

Republic Bank, one of T&T’s largest publicly listed companies, responded on August 14, ten days after the questions were sent. Following are the questions to the bank and its response:

QUESTIONS:

1 How would you describe the banking environment in Suriname?

2 Can you provide a breakdown of the bank’s loan book?

3 What is the level of non-performing loans, loan loss reserves as at the most recent quarter?

4 How profitable is the bank, in US dollars terms, as at its most recent annual period? Also, what are the return on equity (ROE) and the return on assets (ROA) of the bank?

5 What is the competitive position of the bank?

6 What are the growth prospects of the bank, given that the country’s main exports are alumina, gold and oil, all of which have suffered price declines in the last year or more?

7 In broad terms, what is Republic going to do to attract more business to the bank?

8 Will Republic embark on a restructuring programme at the bank in Suriname in order to cut costs?

9 RBC Caribbean’s July Economic report indicates that Suriname’s reserves fell 31 per cent y-o-y to US$504 million, which it estimates to be roughly 2.5 months of imports.

Is Republic Bank prepared for a loss in the value of the Suriname dollar?

 

ANSWERS

The Surinamese market is highly competitive.

Out of the 10 commercial banks in Suriname, Republic Bank (Suriname) NV (RBSR) is currently ranked as the third largest bank, with DSB and Hakrinbank ranked first and second respectively. The bank finances all sectors of the economy and its portfolio extends to customers at all levels: retail, commercial and corporate.

The loan portfolio of RBSR is strong and healthy and its level of non-performing loans is among the lowest in Suriname and possibly the region; it is well below the five per cent NPL average. As far as the profitability and competitive position of the bank are concerned, there is tremendous potential.

Over the past five years, the Suriname economy has demonstrated consistent growth of between 2.9 per cent and 5.3 per cent. Though, growth in 2015 is expected to decelerate, it will still be positive, and from 2016 onward, growth is expected to rebound, based in part on two major projects that will be coming onstream: the new gold mine in the Nausau region, and the new state oil refinery (Staatsolie Maatschappij Suriname NV).

Suriname is dynamic and is on a very good trajectory and Republic Bank believes in the country’s potential and the resulting opportunity for commercial banks drives the intention to become the number one bank in the market.

Republic is in Suriname because the market is an excellent fit for its strategic Caribbean push and based on the stage of market development the bank believes that it can add value. Republic expects to be an innovator in Suriname, guided by the belief that there is significant space for the introduction of new products and new channels for the delivery of products and services. It was the first bank in the English-speaking Caribbean to offer credit cards with chip and PIN technology. It is the first with this innovation in Suriname.

RBSR is the only bank in Suriname that is part of a larger group. This gives it certain unique advantages, particularly in the area of investment banking, and the bank will make available to the Surinamese market its wealth of banking expertise.

Republic has a very strong tradition of local empowerment when it comes to operations within a jurisdiction. In practical terms, this means that local management is allowed and expected to make decisions related to their territories, usually without reference to head office. The bank has very real expertise in economies driven by mineral wealth, given its experience in T&T and in Guyana. This gives it an important perspective on Suriname’s economy and Republic is confident that it can provide businesses in the Surinamese sector with an unprecedented level of support that will benefit them.

When Republic decides to enter a market, it is there for the long term. This approach has ensured the creation of significant value for each of its strategic investment partners and in every one of the markets it has entered.

The bank sees positive prospects for growth in the economy, and while the possibility of a depreciation of the Surinamese dollar is a risk, it is one for which Republic is prepared. Should there be devaluation, the bank expects that RBSR’s profitability will be maintained and is confident in the wisdom of this investment.

Republic Bank is confident about the future and while, at this time, the bank cannot say that commodity prices will not fall further, the bank is reasonably encouraged that the most significant deadlines have already occurred.

The bank’s confidence comes from its experience as a well as the team chosen to lead RBSR. Throughout its history and more so, over the last decade, as Republic Bank has expanded into new territories, it has gained increased insight and knowledge. In all its markets and with ever-changing circumstances, it has and continues to encounter, challenges and opportunities, and with its increased experience, has become better at converting the former into the latter.

In keeping with the code of conduct in Suriname and in compliance with the laws and regulations of the country, RBSR has installed a management board of directors, led by managing director Gloria Anthony, with deputy managing director Peter Ng A Tham and director of corporate banking Montague Mc Leod. The team has a combined total of over 75 years banking experience in corporate business banking, SME banking and retail lending and operations.

This team will also have the support of the supervisory board of directors, the members of which are from Trinidad, Guyana and Suriname; three countries with similar economic characteristics and challenges.

In Suriname, Republic Bank will therefore do the same thing it has strived to do throughout its long history; provide personalised efficient and competitively-priced financial services and implement sound policies, which will benefit our customers, staff, shareholders and communities, while aiming to build successful societies.

 

Source:
Sunday Business Guardian, SBG5
Sunday August 16, 2015