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CHAIRMAN’S REPORT
by BOSVG
Maurice Edwards Chairman THE CHALLENGE HAS BEEN TO PIVOT: CHANGING OUR STRATEGY WHILE REMAINING TRUE TO OUR CORE VISION
The BOSVG continued to create value for all its stakeholders during 2020, despite the dominance of the COVID-19 Pandemic. The Bank was called upon to respond effectively to the many challenges posed by the Pandemic and to give real meaning to its slogan ‘doing more together’. This we achieved by continuing to put our clients at the centre of our strategy and activities.
The response by our management and staff to the challenging circumstances was nothing short of outstanding. BOSVG continued to deliver excellent service while being mindful of the health and safety of our staff and customers. The Bank initiated a loan moratorium programme for borrowers affected by the Pandemic which was well utilized and loans under moratorium at the end of 2020 amounted to $171.7 million. At the same time, we had to keep up- to- date with the growing threats from sophisticated cyberattacks. Indeed, cyber-crime, focused mainly on financial institutions, but involving all companies, in general, has increased significantly in this new environment.
Accordingly, one of our top priorities during 2020 and continuing, is to keep our Bank safe and compliant in order to retain our customers’ trust and confidence. Our approach to this issue is to anticipate threats and prevent them from becoming reality.
The Bank, in conjunction with the ECCB and a number of indigenous banks within the Eastern Caribbean Currency Union (ECCU) has embarked on an initiative to utilize opportunities for shared services in regard to risk management and compliance. In the meantime, the BOSVG is well advanced in the formation of its Enterprise Risk Management Framework (ERMF). This framework allows for core components of the identification and assessment of risk. Risk reporting will be facilitated by completing a risk reporting template that captures the risks identified and assessed. There are elements of the framework still to be fully developed, contingent on the outcome of the detailed design of the shared service framework with the ECCU banks and the ECCB.
The economic fallout from the Pandemic has impacted the financial performance of BOSVG. The main manifestation of the Pandemic’s adverse impact on the Bank is the forward-looking provision for credit losses of $11.5 million for 2020, an increase of $8.4 million over the 2019 provision of $3.1 million. Additionally, the low interest rate globally placed downward pressure on the interest earned on investment securities, resulting in a marginal reduction of net interest income from $37.5 million in 2019 to $36.9 million in 2020. Conversely, customers’ deposits recorded steady growth of 8.8% to end the year at $990.3 million. This was mainly responsible for an increase in the total asset base to $1.2 billion as at December 31, 2020.
In 2020, our net income declined significantly to $3.6 million compared to a net income of $14.1 million in 2019. Notwithstanding this decline in profit, the Bank continues to have the financial strength and the required liquidity to face the many challenges which impact its operations and to be a reliable partner for our customers. At the end of the year, our capital adequacy ratio was 24.3%, significantly higher than the regulatory requirement of 8%.
Considering shareholders expectations and the difficult economic situation for most shareholders, the Board of Directors decided to maintain the dividend policy for a 50% of net income dividend payout. Accordingly, a dividend per share of $0.12 was approved and paid.
The COVID-19 Pandemic has fundamentally changed our economy and our society; it is therefore necessary that we change the way we work and do business. We must however, put our customers at the centre of our plans. In this regard, we have made good progress but there is still a lot to be done if we are to ensure that there is continued trust in our brand.
I wish to thank our shareholders, customers, staff and other stakeholders for their continued support in an extremely challenging environment. You can be assured that whatever challenges lie ahead, the Bank is confident that it has the resourcefulness to rise to the occasion.
Maurice Edwards
CHAIRMAN
