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Saint Lucia Development Bank 2012 Annual Report


3rd Anniversary Theme

a g n i r “Fostering and Nurtu a l b o l G g Deve n i g n e l l loping Na a tion in a Ch Environment”

ANNUAL REPORT APRIL 1 2011 - MARCH 31 2012


Vision Statement To be a progressive financial institution, committed to sustainable socio-economic development and human empowerment; exemplifying financial prudence and recognized as a beacon of transparency, ethical conduct and good corporate governance

Mission Statement To provide accessible and affordable services, facilitate enterprise and sustainable socio- economic development. Tag Line

Affording opportunity for all s Core Value Team Respect Customer centric Professionalism Integrity Innovative Accountability Results oriented


CONTENTS Letter of Transmittal

4

Corporate Data

5

Financial Highlights

6

Chairman’s Report

7

Profile of SLDB

9

Board of Directors

12

Managing Director’s Report - Economic Review

13

- SLDB’s Performance

15

- Sectoral Performance

18

- Portfolio Quality

22

- Operations and Administration

24

- Team SLDB

25

- Risk Management Department

26

- Service Delivery Department

28

- Technology Research and Information Management Department

30

- Accounts and Finance Department

31

- YEEF

Financial Statements

32

34


2012 ANNUAL REPORT

LETTER OF TRANSMITTAL

June 15, 2012 Honourable Dr. Kenny Anthony Prime Minister and Minister of Finance Ministry of Finance and Economic Affairs Greaham Louisy Administrative Building Waterfront Castries Dear Honourable Prime Minister: LETTER OF TRANSMITTAL In accordance with Section 30 (3) of Part 5 of the Saint Lucia Development Bank Act, No 12 of 2008; I have the honour to transmit to you the Report and Audited Accounts of the Saint Lucia Development Bank for the financial year ending March 31, 2012. Yours faithfully,

Jean-Francois Sonson Managing Director

04


2012 ANNUAL REPORT

CORPORATE DATA External Auditors KPMG Eastern Caribbean, Chartered Accountants

Bankers 1st National Bank Saint Lucia Ltd Bank of Saint Lucia Ltd

Registered Offices Bridge Street Castries Saint Lucia

Contact Information Telephone: 1-758-456-SLDB (7532) Facsimile: 1-758-45-DEVFX (33839) Email: mybank@sldb.lc Website: www.sldb.lc

LAWYERS

Mr. Tyrone D. Chong Chong & Co. 27 Micoud Street P.O. Box 81 Castries Saint Lucia

Mrs. Cynthia C.F. Combie-Martyr Cynthia Combie Chambers Suite 104 Cox & Company Building Cnr. Cadet & Jeremie Streets P.O. Box 1580 Castries Saint Lucia

Mr. Cyril Landers Landers & Associates Inc. P.O. Box 462 Mongiraud Street Castries Saint Lucia

Mrs. Lydia B. Faisal Lydia Faisal Chambers No. 12-16, 1st Floor Suite No. 4 Lamar Building Bridge Street Castries Saint Lucia

Ms.Kim St. Rose

Date Served: November 2008 - January 2012 Gordon & Gordon Co. 10 Manoel Street P.O. Box 161 Castries Saint Lucia

05


2012 ANNUAL REPORT

FINANCIAL HIGHLIGHTS

Collections Principal collected ($000’s) Loan Interest ($000’s) Principal collected to Loans portfolio Revenue and Expenditure Actual Income to Budgeted Income Actual Expenditure to Budgeted Expenditure Budgeted Income ($000’s) Actual Income ($000’s) Budgeted Expenditure ($000’s) Actual Expenditure ($000’s) Balance Sheet Total Assets ($000’s) Loans and Advances ($000’s) Share Capital ($000’s) Shareholders Equity ($000’s) Profitability Income to capital employed Loan interest income to total income Return on Equity Return on capital employed Depreciation and amortization to total income Return on Assets Working Capital Ratios Current ratio Current assets ($000’s) Current liabilities ($000’s) Staff Analysis Personnel expenses to Income Personnel expenses to loans and advances Number of staff Other Ratios Current assets to loans and advances Loans and advances to capital employed Expenses to loans and advances Expenses to total assets Cash Flow Analysis Increase in Loans and advances ($000’s) Cash and Cash Equivalents ($000’s)

2012 $

6,454 1,598 27.16%

2011 $

2010 $

2,540 838 17.52%

773 281 12.42%

0.90:1 0.91:1 2,517 2,256 4,915 4,485

0.76:1 0.91:1 2,031 1,550 4,207 3,847

0.99:1 0.96:1 519 513 4,352 4,161

38,110 23,764 23,500 15,326

23,466 14,499 20,000 15,113

15,903 6,225 19,000 15,351

.096:1 $0.71 -14.54% -6.20% $0.28 -5.85%

.070:1 $0.54 -15.20% -10.34% $0.40 -9.79%

.033:1 $0.55 -23.77% -23.60% $1.26 -22.94%

4.20 8,184 1,947

4.22 4,626 1,097

16.09 7,406 440

$0.80 $0.08 26

$1.00 $0.11 26

$3.67 $0.30 23

0.34:1 0.661:1 0.19:1 0.12:1

0.32:1 0.653:1 0.27:1 0.16:1

1.19:1 0.403:1 .067:1 0.26:1

9,482 7,998

8,274 4,459

6,225 7,048 06


2012 ANNUAL REPORT

CHAIRMAN’S REPORT

Bertram C. Clarke, Chairman


2012 ANNUAL REPORT

During the financial year 2011–2012, notwithstanding the continued sluggishness of the Saint Lucian economy, the Saint Lucia Development Bank continued its consolidation around the theme “touching lives by investing in our people.” As we reflect on the Bank’s overall accomplishments in a particularly challenging environment, the Bank has indeed touched lives by investing in the people of Saint Lucia. We note in particular, the hundreds of young people who have benefited from the services of the SLDB, in the important area of education; and the several small contractors, home owners and small entrepreneurs in the areas of agriculture, fishing and services, all of whom have been touched by the Bank. Three years in the life of any institution is short to measure its impact in fulfillment of its mandate. However, as the Board of Directors continued through to the end of its first triennium in August 2011, there is cause for celebration and hope. Worthy of note is the growing confidence of our various stakeholders, but particularly our creditors, the National Insurance Corporation (NIC), the Caricom Development Fund (CDF) and the Caribbean Development Bank (CDB). The Board was reappointed to serve for a further triennium, with effect from September 2011 to continue the consolidation process and oversee the implementation of the first strategic plan for the Bank. Directors are

pleased to have had an opportunity to interact with Senior Management and other stakeholders in developing the first strategic plan for the Bank and looks forward to its successful implementation. The Bank continues to be acutely aware of the important role that it is required to play and welcomes the theme chosen by management to mark its third anniversary and continue its thrust during the ensuing financial year - Fostering and Nurturing a Developing Nation in a Challenging Global Environment. As we progress into the ensuing financial year 2012-2013, the operating environment will continue to be challenging, but we look forward with much optimism to the several opportunities which will emerge. Directors note the recent changes in the administration and governance of our nation consequent upon the general elections in November 2011. The Board is pleased that the new administration has embraced the Bank and welcomes its intention to continue providing support to the Bank, with the expectation for the continuing role of the Bank in promoting socio-economic development, consistent with government policy, geared towards generating economic growth.

I wish also to thank my fellow Directors for their continued support during the financial year 2011-2012 and the Management and Staff for their invaluable contribution in the past year. Significant challenges continue to lie ahead, but we believe that with the continued dedication of Directors, Management and Staff; and the support of our other stakeholders, including our shareholders – Government of Saint Lucia, and creditors, we will be able to achieve our strategic plans as we work towards our theme: Fostering and Nurturing a Developing Nation in a Challenging Global Environment.

Bertram C Clarke Chairman

I wish to express my gratitude to the Managing Director for his steadfast guidance of the SLDB in this challenging environment and for spearheading the development of the Strategic Plan to chart the way forward for the SLDB.

08


2012 ANNUAL REPORT

PROFILE OF THE BANK

SAINT LUCIA DEVELOPMENT BANK ORGANOGRAM

Board of Directors

Main Functional Areas MANAGING DIRECTOR’S OFFICE (1) Planning & Administration (2) Corporate Communication (3) Corporate Governance (4) Board Secretariat (5) Human Resource (6) Training & Development (7) Internal Communucation/Corporate Culture (8) Service Quality

TECHNOLOGY, RESEARCH & INFORMATION MANAGEMENT DEPT. (1) Information Systems. (2) Information Security. (3) Premises and Security (CCTV) (4) Technology Management. (5) Operations & Process Engineering. (6) Internet & Website development and maintenance. (7) Research & Documentation. (8) Statistics.

09

FINANCE DEPT (1) Finance. (2) Accounting. (3) Budgeting. (4) Investments. (5) Premises. (6) Procurement.

SERVICE DELIVERY DEPT (1) Business Development. (2) Sales & marketing. (3) Product Development. (4) Preparation and presenta tion of Loan Applications/ Project Proposals. (5) Relationship Management. (6) Client Communication. (7) Loans Administration

(Pre disburstment offer letters securities and other conditions)

RISK MANAGEMENT DEPT (1) Project Review & Appraisal (2) Credit Risk review & monitoring. (3) Technical Assistance. (4) Advisory Services. (5) Loans Administration (Post disburstment - followup collections and recovery)

(6) Business Continuity.

AUDIT & COMPLIANCE


2012 ANNUAL REPORT

MANDATE

“To mobilise and provide finance for and promote and facilitate the expansion and strengthening of the economic development of Saint Lucia and foster the development of money and capital market in Saint Lucia and member states of the Organization of Eastern Caribbean States.” (SLDB Act No 12 of 2008) In articulating the mandate of the Saint

Lending and AML-ATF Policies. Given the

Lucia Development Bank, The SLDB Act

Bank’s intention to move towards an en-

No. 12 of 2008 requires that the Bank

terprise-wide risk management framework,

engages in normal development bank-

the functions of the Risk Management

ing activities. This it defines as accepting

Department was also expanded during

deposits; negotiating and accepting loans

the financial year to assume responsibility

and credits; making loans and credits for

for all risks, including operational risk.

“development enterprises” in the areas of agriculture, fishing, forestry, manufactur-

It is expected that during the ensuing

ing/industry, tourism, education, services

financial year, the Audit and Compliance

and other areas deemed a development

Department will be staffed to complete the

enterprise by the responsible government

full operationalisation of the Bank.

minister; providing technical assistance to development enterprises; and such other things considered necessary in the pursuit of socio-economic and capital market development in Saint Lucia and the subregion. The SLDB’s structure and organisation is therefore designed to give effect to this mandate.

Organizational Structure The Bank is structured into six (6) departments as follows: (i) The Managing Director’s Office (ii) Technology Research and Information Management (TRIM) (iii) Accounts and Finance Department (iv) Service Delivery Department (v) Risk Management Department (vi) Audit and Compliance. In the absence of the full operationalisation of the Audit and Compliance Department (due principally to cost containment), the Risk Management Department continued to assume some of the standard functions of Audit and Compliance. This included, review of the integrity and completeness of loan documentation; and compliance with

Strategic Imperatives Given the difficult social, economic and other challenges facing the young people of this nation, from inception, the Bank took a strategic decision to place high priority on interventions aimed at positively impacting the lives of our young people. Education and youth entrepreneurship have therefore assumed tremendous significance for the SLDB. During the financial year, the Bank continued to be engaged in a strategic planning process, which had commenced towards the end of the 2010 -2011 financial year. After much internal and external consultation, a strategic plan was approved by the Board of Directors in August 2011 to guide the Bank for the period 2011 – 2016. To give effect to the strategic plan, internal committees, comprising management and staff were established to review all established policies to ensure alignment with the strategic plan. A number of recommendations for amendment to existing policies and new policies have been forwarded to the Board of Directors for their consideration.

Corporate Governance The SLDB Act No 12 of 2008 establishes the corporate governance framework of the Bank. As a statutory corporation, the Bank’s policies are expected to accord with public policy and at the same time allow for the independence and autonomy of Directors in guiding the Bank. The following sections that underscore the corporate governance framework are highlighted: (i) Functions of the Bank - Sections 5 (1) and (2) (ii) Appointment and removal of directors Section 8 (2) and 16 (1) and (2) (iii) Approval and remuneration of Directors Section 8 (5) (iv) Appointment and Termination of Appointment of Managing Director – Sections 20 and 25 (v) Approval of increases in authorized share capital – Section 41 (vi) Borrowing by the Bank – Section 27 (vii) Appointment of Auditors – Section 31 (viii) Conflict of Interest – Section 18 (ix) Submission of Annual Reports and Audited Statements of Accounts – Section 30 (x) Approval of Regulations – Section 40 To safeguard the Bank from unwarranted political interference, its administration, staff appointment and operations have been assigned to the Board and the Managing Director – Section 20(4) and 22 (1) & (2) In keeping with the Bank’s commitment to good corporate governance, all Directors have been exposed to corporate governance training and are required to attest to a code of conduct. Staff of the Bank are also required to attest to a code of conduct. 10


2012 ANNUAL REPORT

BOARD OF DIRECTORS PARTICIPATION Board Functioning Organ

Board of Directors

The nine-member Board of Directors continued to provide effective oversight and guidance to the Management of the SLDB, with the full participation of Directors and generally, monthly reporting by Management.

Board Participation

B. Clarke: Chairman Anthony Bousquet Matthew Mathurin Tyrone Maynard Jean Francois Sonson

Cointha Thomas: Chairperson Bertram Clarke Anthony Bousquet Matthew Mathurin Kerde Severin Jean Francois Sonson

Credit Sub -committee

The following table illustrates the Board of Directors participation in the affairs of the SLDB:

11

J Charles: Chairperson Bertram Clarke Kerde Severin Tyrone Maynard Francis Leonce Jean Francois Sonson

Audit and Governance Sub-committee

Charters were finalised for all of the subcommittees, with two of the charters to be approved by Directors during the ensuing financial year.

Bertram Clarke: Chairman Francis. Leonce: Vice Chairman Jean Francois Sonson: Managing Director Anthony Bousquet Tyrone Maynard Kerde Severin Cointha Thomas Matthew Mathurtin Mary Juliana Charles

Finance and Investment Sub-committee

(i) Human Resource and Compensation Sub-committee (ii) Audit and Governance Sub-committee (iii) Finance and Investment Sub-committee

Information and Communication Technology Sub-Committee

For more effective oversight and review of the operations of Management, two additional Board Sub-committees were established during the financial year. These were: (i) Information and Communication Technology Sub-Committee and (ii) Credit Sub-committee. The Sub-committees that were previously established from inception were the following:

Human Resource and Compensation Sub-committee

Board Committees

Members

Anthony Bousquet: Chairperson Aloysius Burke (Alternate to Director NIC) Bertram Clarke Kerde Severin Jean Francois Sonson

Jean Francois Sonson: Chairperson Bertram Clarke Mary Julian Charles Cointha Thomas Francis Leonce

Number of meetings

15

10

1

4

2

Separate meetings of the sub-committee were not held, as loans above the Managing Director’s delegated limit were reviewed at Board meetings.


2012 ANNUAL REPORT

12


2012 ANNUAL REPORT

MANAGING DIRECTOR’S REPORT

Jean Francois Sonson, Managing Director 11


Managing Director’s Report

ECONOMIC REVIEW International Economic Context Global economic performance over the review period has been characterized by significant differences in economic indicators across different regions. Overall, the world economy grew at a modest rate of 3.80 percent in 2011 as compared to a growth rate of 5.2 percent in 2010. The reduced rate of growth was largely attributable to the insipid growth within advanced economies. Fiscal instability within the Euro- Zone, the continued political unrest within the Middle East, rising commodity prices, as well as weakened credit, labour and housing markets, all contributed to a slowdown in the rate of global economic recovery. The continued realignment of global economic power towards the BRICS nations (Brazil, Russia, India, China and South Africa) was further solidified over the period under review. These nations all registered strong growth, albeit at a reduced rate vis-Ă -vis 2010. These jurisdictions are now faced with new challenges emanating from inflationary pressures caused by accommodative macroeconomic policies, robust domestic demand and strong capital inflows. The economy of the United States remains highly volatile. The sluggish transition from public to private sector demand upon the culmination of a multiplicity of fiscal stimulus packages, and overall reductions in government spending resulted in a slowdown in economic activity within the USA over the latter part of the fiscal year. Despite the aforementioned, the economy of the United States

2012 ANNUAL REPORT

recorded a reduction in unemployment of 0.9 percent, as well as an increase in business investment, consumer spending, and net exports. Generally, the continued uncertainties associated with the global economic recovery process adversely affected investor confidence within Saint Lucia’s primary international trading partners over the review period.

Regional Economic Context Noticeable differentials in economic activity were reported among Caribbean nations over the review period. Some territories realized negligible growth below 2 percent over the review period as indicated in Table 1 Below. Jamaica recorded its first annual expansion in real GDP since 2007, owing to the rejuvenation of the mining and agricultural sectors respectively. The only territories where significant expansion was realized were Guyana and Haiti respectively. In both jurisdictions, growth rates in excess of 5 percent were recorded. As a group, the Eastern Caribbean Currency Union contracted by 0.6 percent in 2011. This represented a moderate improvement over the previous two fiscal periods, when contractions of 5.7 percent and 2.2 percent were reported.

Domestic Economic Context During the last financial year, the lagged effect of the global economic crisis continued to be felt within the domestic economy. Although signs of recovery were evident, overall economic growth was constrained by significant declines in the major

productive sectors. As highlighted within the Economic and Social Review for 2011, value added in the hotel industry declined over the review period. Declines in both the stay-over and cruise subsectors resulted in total visitor arrivals of 976,216, representing a 3.9 percent reduction over the previous year. Moreover, total visitor expenditure declined by more than the proportionate decline in arrivals, owing to significantly discounted accommodation rates. The continued subpar performance of the sector, coupled with its overall vulnerability to external shocks continues to be a cause for concern. The Agricultural Sector continued to languish over the review period, with real value-added within the sector declining by 6.5 percent in 2011. The deleterious effects of Hurricane Tomas in late 2010 were compounded by the recurring problems of pest infestations and diseases. The construction sector proved to be the lynchpin within the domestic economy in 2011. The industry expanded by 2.1 percent during the fiscal year. This was spurred predominantly by public sector expenditure. The manufacturing sector managed to circumvent increased operating costs fuelled by rising oil prices. With food and beverage production providing the impetus for growth, overall economic expansion of 2.5 percent was recorded in 2011. Real growth in financial intermediation contracted for the third consecutive year, falling by 0.2 percent in 2011. This was largely due to augmented levels of non-performing loans and 14


Managing Director’s Report

2012 ANNUAL REPORT

Table 1: Selected Regional Economic Indicators Country

Barbados ECCU Guyana Jamaica Trinidad and Tobago

Real Growth percent

Inflationpercent

2008r 2009r

2010r 2011pre 2008

2009

0.1 2.7 2.0 -0.9 3.5

0.2 -2.2 3.4 -0.1 -0.02

3.1 1.2 3.0 10.2 7.0

-3.7 -5.7 3.3 -3.0 -3.5

0.5 -0.6 5.4 1.5 -1.3

8.6 7.5 6.4 16.8 12.0

2010r 2011pre

5.5 2.7 3.7 11.4 10.2

8.7 3.5 3.3 6.0 5.3

larger provisioning for bad debts. Within 2011, domestic credit grew by 6 percent. This was matched against a growth of 6.7 percent in the broad money supply. Consequently, the banking system was characterized by increased liquidity over the fiscal period.

Source: 2011 Economic and Social Review r=revised

pre=preliminary

SLDB’s PERFORMANCE Amidst turbulent economic conditions, the Saint Lucia Development Bank stood as a beacon meeting the needs of the marginalized in the society providing finance and technical assistance across all sectors. The important role which the Bank plays in creating and sustaining economic activity in communities island wide cannot be over emphasized. During the period under review, the Bank embarked on the preparation and implementation of a five year strategic plan for the period 2012 -2016 inclusive. Successful implementation of the plan will take the Bank to another level with additional products and service offerings, improved efficiencies and financial viability. During the period under review there were 656 enquiries with a potential loan value of $39.2 million. Enquiries which converted to applications totaled 345 valued at $26.7 million. However, a total of 343 loans valued at $14.2 million were approved. Compared to the previous year, there was a decline in the number of approvals by 30 and 15

$2.7 million or 15% in value. This decline may be attributed to a general decline in economic activity in the country during the period. Disbursements for the period amounted to $16.2 million inclusive of disbursement for loans approved the previous financial year. Compared to the previous period, overall, disbursements for the financial year under review exceeded the previous year’s by $5.3 million or 49%. Disbursements were propelled by the Bank’s Bridging Finance facility which provided short-term financing mainly to contractors to undertake infrastructural repair work island-wide. The sector generated disbursement of $4.4 million. The housing sector followed with disbursements of $4.6 million and education $4.4 million. Over one thousand jobs were created or sustained in the construction and agricultural sectors and sales generated from agricultural projects funded by the Bank were estimated at $2.5 million. The Bank continued to provide much needed technical assistance to

clients through its qualified Relationship Specialists and two interventions were sourced from the Caribbean Technological Consultancy Services, a subsidiary of the Caribbean Development Bank. Amidst the unfavorable global financial climate and sluggish domestic economy the Bank’s performance can be regarded as commendable. The Bank is optimistic about the ensuing financial period having recently secured loan funding from the National Insurance Corporation, CARICOM Development Fund and Caribbean Development Bank. With national focus on the creative industries sector, agricultural diversification, housing development and use of alternative energy sources, the future holds exciting new opportunities for the Bank.


Managing Director’s Report

2012 ANNUAL REPORT

365 360 355 350

Number

345 340 335 330 Enquiries

Approvals

Applications

$40 $35 $30 $25 $20 Value($EC Millions)

$15 $10

ts

s

en

al

m

ov Di

sb

ur

se

pr Ap

tio ica pl Ap

En

qu

iri

ns

es

$5

$18 $16 $14 $12

Disbursements ($EC Millions)

$10

Approvals ($EC Millions)

$8 $6 $4 $2 0

2010

2011

16


Managing Director’s Report

2012 ANNUAL REPORT

Sector interest income 3%

2%

2%

Services

Agri

Ind

6%

5%

Income categorized

Industry

Tourism Staff Loans

Serv

$127,244

Tourism

Education

Investments

$94,998

Agriculture

36%

Housing

Finance charges

$361,091

Staff loans 45%

Fees

Loans

Education

$1,597,894

Fishing Housing

Fishing 1%

Comparative Loan disbursements by month $4000000 $3500000 $3000000 $2500000 $2000000 4/10 3/11 4/11 3/12

$1500000 $1000000 $500000

17

ct o No ber ve m be De r ce m be r Ja nu ar y Fe br ua ry M ar ch

be r

O

t

em

gu s

Se

pt

e

ly

Au

Ju

Ju n

M ay

Ap

ril

0


2012 ANNUAL REPORT

Sectoral Performance Agriculture & Fishing Facility

T

he agricultural sector faced tremendous challenges during 2011. Farms throughout the island had still not recovered from the passage of Hurricane Tomas, when they were further exposed to extended periods of unstable weather patterns during the earlier part of the year. The island’s Banana industry also suffered a severe blow from the Black Sigatoka Disease. Investor confidence for Bananas and crops were at an all time low. Despite the impending threat of disease outbreak and the increased frequency of unfavourable weather patterns, the Bank was able to record an increase in agricultural loan approvals for the period under review. A total of 29 loans were approved over the period for a value of $0.7 million with disbursements totaling $1.0 million inclusive of loans approved the previous period. Approvals over the fiscal year were reflective of the continued shift in the country’s agricultural sector from a predominantly banana/crop base sector to a more

diverse blend into livestock and agri-business. The fishing sector also recorded growth with five loans being approved over the period. This provided a means of income for approximately sixteen households. The Bank’s agricultural portfolio directly correlates with job creation within rural communities. An estimated 144 jobs were created during the financial period under review. The estimated sales value of these projects was over $2.5 million within the first year of operation. The livestock sub-sector, primarily broiler producers, accounts for approximately 40% of these sales. It is expected that the livestock and fishing sectors will maintain their trend of steady growth for the next fiscal year. The SLDB will continue to persist in its mandate to facilitate the diversification needs of the agricultural sector, with a strong emphasis on youth empowerment through the Youth Agri-Entrepreneurial Project (YAEP). The onset of the Black Sigatoka disease in banana s provides new opportunities in agricultural diversification and the Bank is well poised to make a meaningful contribution to the island’s food security endeavor.

Thousands ($EC)

300 250

11%

200

20%

150 3% 2%

100 50

15%

0 49%

t

or

p Ex

s/

s

ne

i us

B

Eq

en

m

p ui

s

fra

n t/I

e

ur

ct

tru

a

an

n Ba

ck

to

s ve

Li

o

/R

e bl

a

et

g Ve

ps

ro

c ot

Value of loans approved and disbursed

g

in

sh

Fi

Approvals Disbursement

Business/Export Banana Vegetable/Root crops

Equipment/Infrastructure Livestock Fishing

Jobs created by sector 18


2012 ANNUAL REPORT

EDUCATION FACILITY

T

he St Lucia Development Bank continues to be a major investor in the Education Sector. The policies of the Bank are geared towards more affordable access to higher education, which ultimately results in a well-trained labour force. One hundred and forty-four (144) loans totaling approximately $3.5 million were granted during the period under review. This reflected a 49% decrease in the number of loans and decrease in value by $3.3 million, as compared to the previous year. This decrease was largely attributed to the reduced number of students who were accepted at the Illinois Institute of Technology and the deferment of the Tourism and Hospitality Programme offered by Monroe College. To date, four hundred and ninety-six (496) students have benefitted from the Bank’s Education Lending Facility, with a total student loan portfolio of $13.3 million. In the period under review, Monroe College Tourism and Hospitality Institute was the main beneficiary of this facility having approximately eighty four (84) students securing loans from the Bank to pursue various certificate courses in Tourism and Hospitality, bringing the total number of loans issued for this programme to two hundred and seventy eight (278) loans. Some students who have completed the programme are employed at land based tourism organizations and in the cruise line industry. 19

Unfortunately, the bank has observed a degree of high loan delinquency from this programme and faces serious challenges in the recovery of these loans as very few students have been recruited by the expected entities. Some establishments on island have internal policies which do not facilitate salary deductions making it impossible to collect repayments from source. Additionally, some students move from job to job and tracking them can be very time-consuming. Others are engaged in low paying positions while some have not shown the required commitment. During the year under review, nine (9) new students were facilitated under the Government of Saint Lucia Guarantee Funds for various courses being pursued at Illinois Institute of Technology. Guided by the List of Areas for National Training, students pursue certificate, undergraduate and postgraduate programmes locally, regionally and internationally. The majority of students who were issued loans in 2009 - the same year of the Bank’s re-establishment – are expected to graduate by June –July 2012. The Bank anticipates that these students would have successfully completed their programmes and return to contribute to nation building and economic development. The SLDB continues to deliver a solid performance on its promise of affordable education investment with education loans comprising the single largest sector of its portfolio, indicating the Bank’s continuous focus on human capital l development.

.Fig 1: Student Loans approved in various subject areas IT

11% 70%

10% 2% 6% 1%

ACCOUNTING IIT - VARIOUS AREAS HOSPITALITY LAW OTHER

Fig 2: Students in various study

8% 13% 79% LOCAL REGIONAL INTERNATIONAL


Managing Director’s Report

2012 ANNUAL REPORT

Housing Sub-Sectors

HOUSING FACILITY

Renovation/Extention 4%

U

nder its housing portfolio, the SLDB continues to provide funding to qualified applicants for purchase of land, house and land, home construction, renovations and extensions and residential land development.

House Construction 44%

Land Purchase 27%

During the period under review, the Bank approved 30 loans in this sector totaling $4.7 million. The loans were utilized as follows: • • • •

Home construction – 11 Home renovations – 2 House and land purchase – 6 Land purchase - 11

A total of twenty (20) families were housed and seventeen (17) persons became proud land owners. It is anticipated that within the next five years those land owners, who have not yet constructed their own home will do so through further financing from the SLDB. The projects were implemented throughout the island ranging from Plateau, Babonneau in the north to New Field, Choiseul in the south-west. Approvals for the reporting period declined from $5.1 million in the previous year to $4.7 a decline of 8%. There were 46 enquiries totaling $7.3 million, but as expected not all enquires were converted to loans. The Bank continues to advocate for new approaches towards fulfilling the demand for housing. The Bank recognizes that residential lands are costly and limited in supply and consideration must be given to higher density developments and alternative models, including higher rise structures. Additionally, new construction technologies inclusive of design, alternative materials and processes are required with a view to reducing construction cost.

House & Land Purchase 25%

BRIDGING FINANCE FACILITY

T

he Bank’s Bridging Finance facility continued to grow providing much needed support in short- term financing to small contractors. Damage to the island’s infrastructure caused by the passage of hurricane Tomas enabled small contractors to be engaged in constructing and repairing roads, retaining walls, footpaths, drains and repairs to public buildings. During the period under review, the Bank approved one hundred and twenty four (124) loans in this sector to the tune of $4.4 million. Approvals in this sector represented 100% growth compared to the previous year. Disbursements for the period were $4.2 million compared to $2.2 million for the previous financial period. Short- term employment was generated for approximately six hundred (600) persons, for a periods ranging from one week to three months. With the proposed incentives to the construction sector made by the government, the Bank anticipates further growth in this sector during the ensuring period. Bridging Finance $5,000.000 $4,500,000 $4,000,000 $3,500,000 $3,000,000 $2,500,000

Approved ($EC)

$2,000,000

Disbursed ($EC)

$1,500,000 $1,000,000 $500,000 2011

2012

20


Managing Director’s Report

2012 ANNUAL REPORT

APPROVALS

INDUSTRY, SERVICE AND TOURISM FACILITY

T

he SLDB remains focused on the development of small and medium enterprises. On this basis, the Industry, Services and Tourism Sectors constitute a critical component of the bank’s overall lending agenda. The performance of the aforementioned sectors was a direct reflection of the incipient pick-up in overall economic activity within the domestic economy. Overall interest in debt financing under the Industry, Services and Tourism sectors resulted in a combined fiftytwo (52) enquiries valued at $11.33 million over the review period. Unfortunately, a large proportion of these requests did not qualify for lending based on the profile of the projects and the Bank’s policies.

INDUSTRY

approved. This represents forty-nine (49) percent of the total number of applications received within the fiscal year. Additionally, total disbursements within the period under review amounted to $1.5 million and are inclusive of facilities approved during the previous year. Overall, the Bank’s lending to the aforementioned sectors was constrained by difficult economic circum$1,000,000 $900,000 $800,000 $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 Industry

Services

Approvals ($EC)

Tourism

Disbursements ($EC)

Over the last fiscal period, seventeen (16) loans valued at $0.80 million were Approvals and Disbursements within the Productive Sector

TOURISM

SERVICES

39%

37%

24%

Proportion of productive sector approvals

stances. This can be exemplified by a 6.1% decrease within the Light Manufacturing Industry, as well as a decline in the Tourism Sector. The primary lending functions of the Bank which have been highlighted above continued to be supplemented by technical advisory services. The above-mentioned contributed to these clients surviving a turbulent economic period, and remains the distinguishing factor in the Bank’s services to its productive sector clientele.

EXOGENOUS SHOCK FACILITY (ESF)

I

n a continued effort to assist small businesses in coping with the endogenous and exogenous shocks associated with an uncertain global economic environment, the Exogenous Shock Facility (ESF) remained available to enterprises within the Productive Sectors. This facility represents an eighteen-month soft credit facility to provide small business with a liquidity buffer. Loans under the aforementioned facility have been made available at a constant rate of 5.50%.

21

The facility was made available to the following sectors; • • • •

Industry/Manufacturing Agriculture/Agribusiness Tourism Services

During the reporting period, twelve ESF loans were approved with a cumulative value of $295,600. Disbursements for the period totaled $280,600. Of the approved loan amount, sixty

percent was directed towards the Agricultural sector, with forty percent of total approvals directly supporting the Manufacturing Sector.

Percentage of ESF APPROVALS AGRICULTURE

SERVICES

INDUSTRY

27% 12%

61%


Managing Director’s Report

2012 ANNUAL REPORT

PORTFOLIO QUALITY Loan Portfolio Quality Report As At March 31, 2012 ITEM Performing Loans Non- performing loans

March 2012 $ 23,924,21.55 $ 167,096.16

March 2011 $14,391,507.96 $ 224,338.44

Gross loans

$24,094,517.71

$14,615,846.40

Non- performing loans to gross loans

0.6%

1.5%

Arrears rate

2.02%

0.43%

T

he gross loan portfolio moved from $14.62 million to $24.09 million during the financial year, increasing by $9.47 million, reflecting an increase of approximately 65% in line with strategic objective of the Bank. The arrears rate, which increased by 1.59% from last financial year to 2.02%, is reflective of the adverse impact of Bridging Finance loans for small contractors and loans for students pursuing the Monroe College Hospitality Training Programme.

Facility, delays in receiving the proceeds of contracts from Government to service those loans attributed to the arrears position of the portfolio and the rescheduling of six (6) Bridging Finance. It is expected that all the facilities will be repaid within the next quarter and will not have any longterm adverse impact on the Bank’s balance sheet.

Total principal in arrears at year-end totaled $440,651.44, while principal in arrears on non-performing loans was $56,825.20 or 12.9% of the total principal in arrears. Principal and interest in arrears for less than 31 days totaled $206,606.45, representing 42% of the total principal and interest in arrears. Amounts in arrears for principal and interest on loans over 31 days past due, totaled $280,992.14, representing 58% of the total principal and interest in arrears.

In the case of the Education portfolio, as noted, the major negative impact stemmed from the several small loans granted to multiple cohorts of students enrolled in short courses in the Monroe College Hospitality Training Programme. One hundred and sixty seven (167) of these loans had to be rescheduled, when students were unsuccessful in securing anticipated employment in the land-based and cruise tourism sectors. The Bank is giving consideration to various options for addressing the situation, including recourse to the Special Guarantee Fund, established to secure those loans.

With respect to the Bridging Finance

At year end the Agriculture portfolio

arrears rate deteriorated by approximately 0.067%. The emergence of Black Sigotaka disease in the banana industry, the slow recovery of the agriculture sector post hurricane Tomas, along with unfavourable weather patterns created a debilitating environment which continues to suppress farm productivity levels. Notwithstanding, further deterioration in the arrears position was arrested through the utilization of aggressive and consistent preventive and rehabilitation measures for projects requiring technical assistance, as well as in the areas of collections and recoveries. Portfolio quality for the fishing and industry productive sectors also reflected the results of implementation of the aforementioned portfolio management measures. The asset quality in the housing sector remains reasonably healthy with an arrears rate of 0.034%. During the period, two (2) productive sector loans had to be written off, with principal balances totaling $3,553.98. Two (2) matters were referred for litigation; one of which has since been closed successfully 22


2012 ANNUAL REPORT

Managing Director’s Report

Arrears per Sector and the other is pending. To date the Bank has categorized nine (9) loans as non-performing. At the end of the year, principal outstanding on nonperforming loans stood at $167,096.16 and currently approximates 0.69% of the total loan portfolio. Nonperforming loans in the Bank’s portfolio largely consist of productive sector loans. The Bank has been attentive to NPLs which have been managed through dedicated project rehabilitation and loan collection and recovery efforts. Although the Bank has been able to maintain a NPL ratio below 5% for three consecutive years, the threat of potential nonperforming loans in the portfolio must be vigilantly managed to ensure that the NPL ratio stays within acceptable parameters. This situation is more critical given the concentration in the Student Loans portfolio, with most of the students still out on study and within grace period. During the reporting period the Bank, by virtue of its mandate and the current social and economic situation, intensified its efforts to assist marginalized and vulnerable groups and has been able to maintain a relatively healthy loan portfolio while assuming additional risk. The main threat to the Bank’s asset base and sectors continues to be concentration risk in the education sector and risk exposures from the productive sector. While the SLDB continues to promote financial inclusion for vulnerable groups, the Risk Department will continue to employ effective portfolio management strategies to safeguard the Bank’s viability and continued sustainability.

Sector

March 2012 Interest and Principal Outstanding

March 2012 Arrears Rate

Agriculture

$ 69,187.87

0.287%

Housing

$

8,226.55

0.034%

Fishing

$

8,485.48

0.035%

Services

$214,553.56

0.890%

Education

$111,252.85

0.462%

Industry

$ 20,731.51

0.086%

Tourism

$ 54,222.05

0.225%

Total

$486,665.87

2.02%

Arrears Rate 0.890% 0.900% 0.800% 0.700% 0.600%

0.462%

0.500% 0.400%

0.287%

0.225%

0.300% 0.200%

0.834%

0.100%

0.086%

0.035%

0.000%

Ag

re

ltu

u ric

g

sin

u Ho

ing

h Fis

s

ice

rv Se

E

on

ati

c du

y

str

u Ind

m

ris

u To

Arrears Rate

March 2012 Interest and Principal Outstanding $54,222.05 $20,731.51

$69,187.87

$8,226.55

$111,252.85

$8,485.48

Agriculture Housing Fishing

$214,553.56

Services Education Industry Tourism

23


Managing Director’s Report

2012 ANNUAL REPORT

OPERATIONS AND ADMINISTRATION Human Resource Issues Staff Movements

D

uring the financial year under review, there were some staff movements at the lower level of the organisation. Three (3) administrative assistants moved out and were replaced by two (2) new persons in the administrative area. At the senior level, one Senior Manager, Mr. Anthony Harrow was employed in October 2011, as Chief Technology Officer to provide much needed support in the TRIM Department. Consistent with effective strategic human resource management practices, the Board of Directors and senior management are committed to the development of effective succession planning at the SLDB. In the ensuing financial year, greater focus will be placed on this area.

Working Environment

L

ike many office buildings in the city of Castries area, during the year under review, the Bank continued to be challenged with mold infestation at its premises, particularly in the damp rainy season. While constant remedial and control measures are in place, the matter is of concern to management and staff and a more long-term solution is being sought. The Board and Management remain committed to providing the safest and most conducive work environment for its employees.

Union Representation Towards, the end of the financial year, junior staff of the SLDB voted to be represented, by the Saint Lucia Civil Service Association (CSA) as their

bargaining representative. The Board and Management look forward to engaging and partnering with the Union in ensuring the continued consolidation and development of the Bank in the interest of all stakeholders, including employees.

Staff Training

C

ognizance of the need to continue building internal capacity and strengthening the development banking orientation and modern banking practices at the SLDB, during the financial year under review, the Bank continued to devote resources to training. Eight (8) internal training programmes in the areas of: (i) Project Appraisal and Risk Assessment; (ii) Product Knowledge; (iii) Programme Planning, (iv) Customer Service and (v) Anti -Money Laundering and Anti-Terrorist Financing were organized and three (3) senior staff members participated in programmes hosted by the Caribbean Development Bank in collaboration with the Antigua and Barbuda Development Bank and the Association of Development Banks of the Eastern Caribbean (ADBEC). Two (2) staff members participated in external training in leadership development and the manager of the Risk Management Department participated in a regional training programme in Renewable Energy Project Financing through the sponsorship of the CARICOM Secretariat. Additionally, one (1) staff members received re-imbursement for studies undertaken in line with the Bank’s training needs.

Over all, the total expenditure on training for the financial year was approximately twenty two thousand three hundred and twenty dollars ($22,320.00).

Performance Management

T

he SLDB continues to place particular attention on performance. In that regard, consistent with the Bank’s strategic plan, efforts will be made to review the current employee appraisal framework and implement a comprehensive performance management system.

Third Anniversary Celebration and Employee Appreciation

T

he Bank continued its tradition in celebrating significant milestones; and in this regard, Directors, Management and staff marked the third anniversary of the Bank with some modest activities, given resource constraints. Several employees were recognized for their contribution during the year and the Employee of the Year 20102011 was identified. Ms Billia SmithHarrow, who was adjudged employee of the year for the previous year 2009 - 2010, retained the title for a second time.

Social Activities Uniting Staff (SAUS)

T

hough the level of participation in the social activities organized by the SAUS Committee declined over the last financial year, staff continue to maintain a satisfactory level of esprit de corps. Management remains grateful to the Committee for their efforts in that regard. 24


Managing Director’s Office

Risk Management

Accounts & Finance Department

T.R.I.M Department

Service Delivery Management

TEAM SLDB


Managing Director’s Report

2012 ANNUAL REPORT

RISK MANAGEMENT DEPARTMENT risks arising from its core business of providing development financing to the social and productive sectors. The Department also integrated valuable knowledge garnered from a CDB sponsored training workshops on Loan Portfolio Administration, and Risk Management into the Bank’s risk framework.

Ms. Dorn Lafeuillee M.B.A, B.A ( International Business Administration) Manager, Risk Management

A

s the Bank continued to grow its loans portfolio while ensuring prudence and regulatory compliance, its focus continued unabated on strengthening its enterprise risk management framework. During the financial year, the Bank’s key risk exposures were credit and operational risk. The management and mitigation of those risks were managed based on the policies and guidelines approved by the Board of Directors.

CREDIT RISK Congruent with the SLDB’s strategic priorities, the Risk Management department implemented sundry measures to minimize its exposure to the

In pursuing its mandate of supporting entrepreneurship and socioeconomic development, the Bank was faced with unique opportunities for facilitating financial inclusion of marginalized groups, while managing credit risk within established bench marks. In 2011, the Bank con-

tinued its partnership with the Ministry of Tourism and Monroe College (Saint Lucia Campus) in an initiative aimed at providing opportunities for young Saint Lucians to obtain gainful employment in the Tourism industry, particularly in the cruise ship sector. Given the chronic youth unemployment situation in Saint Lucia, the SLDB, seeing the tremendous social benefit of the programme, agreed to provide financing to over three hundred students, on the basis of a special guarantee fund established by government. It was assumed that adequate arrangements would be made to facilitate the repayment of the loans. However, as a result of this initiative, the education portfolio saw a decline in performance, stemming from the loans to

multiple cohorts of students enrolled in short courses at the Monroe College. Employment in the tourism sectors continues to be less than buoyant and most of the students are still seeking suitable employment, both in the cruise sector and land-based sector The Bank is actively pursuing the best options for the servicing and liquidation of these loans, including recourse to the guarantee fund. The Agriculture portfolio recorded a decline in performance due to slow recovery by farmers previously affected by the passage of Hurricane Tomas. For some farmers, this was further exacerbated by the onset of Black Sigatoka infestation of banana crop and other musa species. The Bank maintains its resolve to engage the Ministry of Agriculture in sourcing viable methodologies to restore the farmers’ livelihoods. The Bank recognizes the disaster prone nature of the Caribbean, and is cognizant of the high risk of loss faced by vulnerable and low income groups who are among the principal clientele that the Bank seeks to serve. Being mindful of the challenges faced by these groups, during the reporting period the Bank supported and facilitated a series of workshops spearheaded by leading providers of weather related insurance products. The primary purpose of the workshops was to obtain information to facilitate the designing of appropriate affordable insurance products tailored for the weather patterns experienced in the Caribbean region. The Bank is hopeful that affordable insurance products for its productive sector clients will come to market by the start of the hurricane 26


2012 ANNUAL REPORT

season in June 2012. Notwithstanding the challenges encountered with managing credit risk during the financial year, the Risk department remains committed to maintaining portfolio quality within established strategic benchmarks as it continues to employ aggressive preventive and post rehabilitation measures vis a vis loan collections and recoveries. Given that the Bank was marking its third anniversary of operations, during the reporting period a committee was formed to conduct reviews of the credit risk policy and procedures. A number of recommendations to enhance its credit risk management framework has been submitted for the consideration of Directors. Implementation of the approved recommendations will be spearheaded by the Department in the ensuing year.

COMPLIANCE In ensuring that the Bank is up to date and compliant with the evolving Anti-Money Laundering Anti-Terrorism Financing (AML-ATF) regulatory framework and applicable laws, the SLDB sought to provide all staff with the resources and information required

27 27

Managing Director’s Report

to engender a culture of compliance concerning AML-ATF issues. During the financial year, staff members were afforded the opportunity to attend a KYC (Know Your Customer) AML-TF training workshop jointly held by the Caribbean Association of Audit Committee Members (CAACM) and the Caribbean Association of Indigenous (CAIB). The Risk Manager attended trainings and meetings conducted by the Financial Intelligence Authority (FIA) which reinforced current knowledge and provided updates on the objectives of the regulatory unit and best practices for customer due diligence as well as provided clarification on existing compliance issues. Training sessions were held during the year to apprise staff of amendments and updates to existing regulation and guidelines.

ASSET-LIABILITY \MANAGEMENT During the previous financial year, the Risk Department was instrumental in completing the first draft of the AssetLiability Management (ALM) Policy framework aimed at safeguarding the Bank’s balance sheet as it pertains to balance sheet related risks. During the reporting period, the Risk department

has continued to integrate key amendments to the policy framework while it anticipates final Board of Directors consideration and approval in the ensuing financial year.

BUSINESS CONTINUITY PLANNING /OPERATIONAL RISK The Bank’s disaster readiness and response mechanisms were tested this past year with an incidence of fire damage to its premises as a result of a fire occurring in an adjacent building. Though the Bank was faced with some operational issues within the following weeks due to the damage incurred, all designated disaster response teams and staff rallied assiduously to ensure that the Bank remained operational with minimal interruption to normal business activities. During the latter part of the financial year, the mandate for Business Continuity Planning was transferred to the TRIM Department, however, the core responsibility of operational and enterprise risk management remains with the Risk Management Department. The Department will continue to have general oversight over the business continuity and operational issues faced by the Bank.


Managing Director’s Report

2012 ANNUAL REPORT

SERVICE DELIVERY DEPARTMENT

Mr. Philbert Francis LLB (Hons) Manager , Service Delivery

T

he Service Delivery Department is the medium through which the Bank fulfills its mandate in the provision of loans and technical assistance to customers. The period under review proved to be a very challenging one for the Department, as it contended with the continuing contraction and sluggishness of the local economy emanating from the global economic recession. However, the wide range of loan requests made by customers, some of which were novel in nature, provided exciting opportunities for the Department to deliver creative financial solutions to meet customers’ needs. During the period under review, the

Department continued to make presentations to organizations within various communities, promoting the Bank’s products and services. Presentations were made to several farmers’ groups, inclusive of the Black Bay Small Farmers Cooperative, Belle Vue Farmers Cooperative, The Saint Lucia Civil Service Association, The St. Lucia Broilers Association and Pine Apple Growers Cooperative. Additionally, meetings were held with the staff of LIME, LUCELEC and inmates of Boredelias Correctional Facility, some of whom are interested in opportunities for self-employment after serving their terms. Radio and Television discussions were also held. The Department continued to collaborate with institutions such as the Office of Private Sector Relations (OPSR), the Ministry of Agriculture through its Youth Agri-Entrepreneurial Project (YAEP), the Department of Fisheries and Monroe College in fulfilling its mandate. Technical assistance interventions were sought for two clients, through the Caribbean Technological Consultancy Services (CTCS), an organ of the Caribbean Development Bank. The Department played a pivotal role in the development of the Bank’s five (5) year Strategic Plan for the period 2012- 2016, inclusive. During the review period, staff of the

Department underwent training in customer-service excellence facilitated by Celestial Self Development Centre. Training was also provided in Credit Risk Analysis, as a means of enhancing the capacity of the staff to assess customers’ requests and recommend appropriate solutions. During the period, the Department embarked on a programme of developing the capacity of the staff to prepare project appraisals across sectors, as opposed to the ‘sector specialist’ approach that existed previously. The staff has embraced this new approach which has afforded them the opportunity to enhance their skills sets and more importantly, enable the Bank to provide a more efficient service to its customers. Notwithstanding some challenges, the Department remains fully committed to providing excellent customer-service to its valued customers. The Youth Enterprise Equity Fund (YEEF), a product which enables the bank to provide funding to young entrepreneurs through equity participation, continued to facilitate the growth of enterprises funded by the programme. Investee companies benefited from management advice provided by the Relationship Specialists who serve as company directors, in addition to concessions by way of duty free importation of equipment and supplies. Notwithstanding the increased marketing of this product through radio and television advertising and presentations at youth forums, responses from the youth have been weaker than anticipated. During the ensuing year, a more aggressive and targeted approach will be developed. 28


2012 ANNUAL REPORT

This will include a review of the strategic relations established with various partners, as well the marketing of the product. The Service Delivery Department recognizes the significant role which agriculture plays in the nation’s food security and for this reason is committed to ensuring that the needs and concerns of farmers are brought to the fore. The impact of the Black Sigatoka disease on bananas, access to inputs generally on a timely basis, market limitations and inadequate institutional support from extension services are issues of concern to the SLDB because of the adverse effect loans to this sector can have on the Bank’s lending portfolio quality. The demand for affordable housing on the island continues to be high and the Bank is well positioned to posi-

29

Managing Director’s Report

tively impact this sector. The Service Delivery Department possesses the capacity through its staff to provide the necessary oversight to ensure that contractors deliver quality projects within budget. The Bank continues to advocate for new approaches towards fulfilling the demand for housing. The Bank recognizes that residential lands are costly and limited in supply and consideration must be given to higher density developments and alternative models, including higher rise structures. Additionally, new construction technologies inclusive of design, alternative materials and processes are required with a view to reducing construction cost. The Department recently commissioned the production of sector specific advertisement for the housing sector and the availability of funds for housing features highly at presentations to groups within the community.

The financing of students’ loans on the island continues to be of grave concern to the Bank. There is no doubt from the evidence at hand that the current approach which is increasingly predicated on government guarantees is not sustainable. As a consequence, the Bank is spearheading a drive to revamp student loan financing which would redound to greater accessibility, an enhanced framework for loan servicing and decreased reliance on governmental support. Discussions have commenced with the relevant partners on the matter. The staff looks forward optimistically to the ensuing financial year to implement the several new initiatives in the Strategic Plan and provide much needed financial and technical support to the small and medium size business sector in particular, to accomplish the broad social and economic mandate of the Saint Lucia Development Bank.


Managing Director’s Report

2012 ANNUAL REPORT

TECHNOLOGY RESEARCH AND INFORMATION MANAGEMENT (TRIM) DEPARTMENT

Mr. Amatus Edwards BSc (Mgmt and Info. Sys.) Manager TRIM

T

oday’s financial environment is characterized as complex and very dynamic - a consequence of rapid innovation in communication technology and increased awareness and demands from customers. The Saint Lucia Development Bank has operated and will continue to operate in this complex and competitive environment, characterized by these changing conditions and as well, a highly unpredictable economic climate. Information and Communication Technology (ICT) is at the centre of this global change curve and cannot be ignored due to its critical role in contemporary organization. ICT directly affects how managers decide, how they plan and what products and services are offered in the financial industry.

Mr. Anthony Harrow A.A.S Computer Information Systems & Creative Computing, PMP Chief Technology Officer The Technology, Research and Information Management (TRIM) Department will continue to lay the foundation needed to support the Bank in achieving its five (5) year Strategic Plan. With new and exciting products and services scheduled to be rolled out, means that the TRIM Department over the next few months will be undertaking an extensive review, of its current Information System and where necessary, implementation of new systems and technologies to ensure that the supporting infrastructure is wellplaced to carry the Bank forward in the next stage of its development. While the functions carried out by the TRIM Department is primarily that of a facilitator or support center for the other departments within the Bank, the Department will continue to contribute positively in other ways to the growth of the institution. Over the last year

and particularly over the last quarter, the TRIM Department has focused some of its activities on finding and implementing measures to reduce the operational costs of the Bank. Through the actions of the TRIM Department, the Bank will stand to benefit from a reduction in monthly telecommunications charges of nearly one third,, while realizing greater efficiencies in external communicatiion. Internal communication costs will also be addressed and has began with the introduction of the SLDB Intranet (Insight) which staff uses to communicate, share their opinions, and where official information is disseminated. A review of printing costs and solutions will also be undertaken to help further reduce the cost of communication. Being part of a fledging institution the TRIM Department understands the challenges which faces the Bank and will continue to support the operational and strategic goals of the Bank by employing innovative and cost effective techniques. During the coming year the Department will continue to empower staff and focus on human resource development by training staff on the proper use of technologies to help reduce cost and increase efficiencies in the work place. The upcoming year promises to be challenging, but is one that the Department sees as being filled with opportunities. 30


2012 ANNUAL REPORT

Managing Director’s Report

ACCOUNTS AND FINANCE DEPARTMENT Ms. Gennifer Faissal FCCA Chief Financial Officer

T

he principal areas of daily activities of the Accounts and Finance Department are financial controls and compliance, accounting and financial reporting, budgetary control, procurement and settlement of obligations, investing and cash flow planning, loan disbursements, cash receipts and revenue functions. The Accounts and Finance Department is committed to: - Ensuring that quality financial services and information is provided. - Responding to the changing requirements and priorities of the Bank and its customers. - Complying with financial reporting standards and other regulatory mandates. - Partnering with other departments of the Bank to leverage resources that are essential toward achieving the 31

Bank’s mandate and objectives. Some of the major departmental achievements for the year under review are: • Its contribution in the development of a five-year strategic plan and the production of financial reports and statistics for the period. • Completion of projects to automate the Bank’s payroll and cheque processing. • Satisfying financial information requirements to secure the Bank’s eligibility to obtain various lines of credit. • Interventions in the automation of processes and identification of areas for improved reporting. • Ongoing assessment of existing internal controls and the implementation of additional controls and procedures in response to emerging requirements.

Budgetary Control Strict budgetary supervision has aided the Bank in remaining well within its projected expenses for the financial year. In addition, the Department continued to be vigilant in identifying and recommending areas for cost containment.

Departmental Support The Department extended its resources to wider Bank initiatives by providing support, serving on committees for new initiatives, reviewing of new organizational policies and procedures and representing the Bank at various fora.  

Staffing

The operations of the Department

were not without challenges, as amidst the increased and varying level of organizational and customer needs; its constant and small staff composition sought to respond effectively. In the process the Department continued to build on the positive energies of its staff and re-enforced team-spirit, resulting in the emergence a cadre of well-rounded and versatile individuals in most functional areas within the Department. At the third annual awards ceremony of the Bank, staff from the Department were recognized for Team Excellence, Most Improved and Outstanding Commitment. Staff benefited from training in customer-service, product knowledge, and anti-money laundering; and continued to receive support in relation to their individual pursuits for educational and professional advancement, in line with the Bank’s needs. In pursuit of the Bank’s strategic endeavor to build capacity throughout the Institution, the Department provided cross-training to the Junior Risk Analyst. The individual was excited about the opportunity and cited: “I am thankful to my colleagues in the Accounts Department who despite their super busy schedules were patient enough stop and train me within their designated areas. My questions were always welcome and I appreciated that very much”. The Department remains focused on providing dedicated service in support of the Bank’s growth and other strategic initiatives.


Managing Director’s Report

2012 ANNUAL REPORT

BOARD OF DIRECTORS

Mr. Anthony Bousquet General Manager Glace Motors

Mr. Bertram Clarke Chairman, CEO Banana Industry Trust

Ms. Jacqueline Emmanuel Director, OPSR

Mr. Jermille Daniel CEO, The Cell

Mrs. Mary Juliana Charles Attorney at Law Francis and Antoine Chambers

Ms. Cointha Thomas Budget Director Ministry of Finance

Mr. Jean Francois Sonson Managing Director SLDB 32


Managing Director’s Report

2012 ANNUAL REPORT

PERFORMANCE

I

n 2011, the Youth Enterprise Equity Fund (YEEF) continued to provide a revolutionary option for the financing of startup enterprises which are owned and managed by young entrepreneurs between the ages of 18-35. The YEEF provides venture capital financing to qualifying investee companies, allowing budding entrepreneurs to circumvent the historic impediments attached to the financing of startup businesses. Under the terms of the fund, equity financing continued to be made available at a maximum threshold of $50,000 per investee, with an associated seven year exclusive share repurchase period. Over the period under review, investee firms continued to be supported by a broad array of tax exemptions and other fiscal incentives. Overall, the performance of the fund can be assessed as follows: No. of Approved Investments

8

Value of Approved Investments

Jobs Created

390,000

18

Gross Revenue

~$400,132

The above mentioned translated into four new approved investments over the review period with a cumulative investment value of $200,000. Moreover, total disbursements over the period, amounted to $190,000. Investments were aimed at businesses involved within the Creative Industries, Agriculture, Information and Communication Technology, as well as the Services Sector. Over the last fiscal year, overall public interest in the Youth Enterprise Equity Fund can be assessed as follows:

Enquiries

20

Value

Applications

Value

870,000

11

550,000

Within the review period, the YEEF developed a strategic linkage with the Youth Agriculture Entrepreneurial Programme. Under this arrangement, the YEEF has committed to making equity funding available to qualifying participants, while necessary startup infrastructure and lands are made available by the Ministry of Agriculture, Food Production, Fisheries and Rural Development. Over the period under review the YEEF has also partnered with the Sir Arthur Lewis Community College to develop and finalize a specialized entrepreneurship programme targeted at existing and potential YEEF clients. The programme is expected to be implemented within the coming fiscal period.

33


Managing Director’s Report

2012 ANNUAL REPORT

FINANCIAL STATEMENTS MARCH 31, 2012 (EXPRESSED IN EASTERN CARIBBEAN DOLLARS)

SAINT LUCIA DEVELOPMENT BANK Separate Financial Statements March 31, 2012

35


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NOTES __________________________________________________________________________________________ __________________________________________________________________________________________ __________________________________________________________________________________________ __________________________________________________________________________________________ __________________________________________________________________________________________ __________________________________________________________________________________________ __________________________________________________________________________________________ __________________________________________________________________________________________ __________________________________________________________________________________________ __________________________________________________________________________________________ __________________________________________________________________________________________ __________________________________________________________________________________________ __________________________________________________________________________________________ __________________________________________________________________________________________ __________________________________________________________________________________________ __________________________________________________________________________________________ __________________________________________________________________________________________ __________________________________________________________________________________________ __________________________________________________________________________________________ __________________________________________________________________________________________ __________________________________________________________________________________________ __________________________________________________________________________________________ __________________________________________________________________________________________ __________________________________________________________________________________________ __________________________________________________________________________________________ __________________________________________________________________________________________ __________________________________________________________________________________________ __________________________________________________________________________________________ __________________________________________________________________________________________ __________________________________________________________________________________________ __________________________________________________________________________________________ __________________________________________________________________________________________ __________________________________________________________________________________________ __________________________________________________________________________________________ __________________________________________________________________________________________


2012 ANNUAL REPORT


Affording Opportunity For All

#4 Bridge St. Box CP 5900, Castries, St. Lucia, W.I. Tel: 1 758 456 7535 Fax: 1 758 45 453 3839 www.sldb.lc


SLDB Annual Report 2012  

SLDB Annual Report 2012

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