Jan 2010 Financial News

RBL’s Dulal-Whiteway predicts slower 2010 for loans

Jan 07, 2010

David Dulal-Whiteway, managing director of Republic Bank Ltd (RBL), anticipates that 2010 would be slower than 2009 when it comes to customers taking loans from RBL. “If you look at our balance sheet, we are in a very good position to deal with all the uncertainties that may come our way this year. I think 2010 would be a bit more challenging than 2009, because I don’t think there would be as much growth in the loans portfolio as we experienced last year,” Dulal-Whiteway said, speaking after RBL’s annual general meeting (AGM) at the Trinidad Hilton, St Ann’s. Dulal-Whiteway said RBL anticipates there would be less profits in 2010 because of lower interest rates on loans.

“With the reduction in interest rates, our margins are narrowing and, therefore, with the lower margins, we would make less profit. “The revenue stream might fall. It’s difficult to say by how much because interest rates are fluctuating. If you look at the size of our balance sheet, every one per cent reduction in our net interest margins, represent about $420 million,” Dulal-Whiteway said. RBL recorded a net profit attributable to shareholders of $948.4 million in 2009. “While this was a decline of $255.4 million (21.2 per cent) over 2008, the bank’s core profits before tax was $1.76 billion, an increase of 11.3 per cent over the $1.58 billion reported last year,” bank chairman Ronald Harford had stated. Given that prime lending rates have been declining since July 2009, Dulal-Whiteway said there has been no increase in persons borrowing money.

“There has not really been any uptick with respect to loan demand because loan demand is a function of business confidence than consumer confidence rather than interest rates. “Our view has been that we need to bring the interest rates down, because if our customers are getting more difficulty with their cashflow, that means there would be less money going towards interest than they were paying before,” Dulal-Whiteway said. He said more individuals—but a very small number of them—are applying for loans rather than companies.

“The main trends in the overall banking sector has been the reduced interest rates and the high liquidity in the banking sector, and I think that will continue for 2010,” Dulal-Whiteway said. Asked about people who have been delinquent in their loan payments, he said the group of persons who fall into this category is a small amount and he is not worried by it. “With slow growth, our balance sheet would not grow as quickly as it did in the past, and if unemployment increases, surely you would have more people unable to meet their loan commitments. There could be increases in delinquency, but it is not something I am worried about,” Dulal-Whiteway said.


Source:
NADALEEN SINGH
Trinidad Guardian
Thursday January 7, 2010

http://guardian.co.tt/business/business/2010/01/07/rbl-s-dulal-whiteway-predicts-slower-2010-loans