Board of Director's Report 2012
This past year, we continued the process to shape our culture around customer service rather than around our products. As a result, our products and services are aligned to what matters most to our customers. Our objective is to make banking easier for our customers by providing access to solutions that match their financial goals and lifestyles.
Customer service
Our customers’ success comes first. Our staff turn-up each day committed to exceed customers’ expectations. That is our constant focus. An increasing number of our customers bank with us online or through mobile devices. Yet, even today, most customers establish their banking relationships through face-to-face visits at branches. That is why we continue to invest heavily in training for our team members to ensure that we are well prepared to offer the service you deserve. We are also committed to offering more digital access via mobile phones, tablet, and computers to allow customers to choose when, where, and how to conduct their banking business.
Our economy
Curaçao faced both economic and political challenges since its inception in 2010. Our country is coping with a deficit on the current account balance of payments and budgetary deficits of the government that will require some decisive measures to solve. Considering the declining international reserves and import coverage, the Central Bank of Curaçao and St. Maarten (‘CBCS’) tightened its monetary policy to contain the extension of consumptive credits and hence impede worsening of the current account deficit. Early 2013, the Government also presented several proposals to the Parliament intended to curtail the (projected) budget deficits of 2011, 2012 and 2013. These projected budget amendments are expected to have an inflationary effect and will further restrict the growth of GDP. On the other hand, should the government succeed in bringing stability and sincerity to the management of public finances, this would have a positive impact on the overall investors’ confidence.
Last year, in conversation after conversation we perceived signs of the worries and uncertainty that influenced consumer and business behaviors. There were bright spots, such as the inception of the construction of the ultra-modern facility of the Curaçao Technology Exchange N.V. that reminded us of the potential that our economy still holds. But overall, our customers remained cautious given the lackluster economy, political skirmishing and pending measures to be introduced by the government.
Financial Highlights
Considering the difficult economic environment described above, we drew inspiration from the quote of the illustrious philosopher, Mahatma Gandhi, ‘A man is but the product of his thoughts. What he thinks, he becomes’. It is precisely in times of difficulty that we must persevere and continue to focus on our strategic goals and objectives. The best measure of progress against that goal is revenue growth. In 2012, we grew net operating income 21% to ANG 98 million, net interest income by 17% to ANG 71 million and non-interest income by 31% to ANG 27 million. Despite a difficult economic environment Girobank’s overall performance in 2012 was commendable. The Bank grew its net profit after tax by 15% to ANG 27 million. Total assets increased by ANG 281 million or 20%. Loans and advances increased by 34% or ANG 279 million and our loan portfolio broke the barrier of 1 billion guilders. Total customers’ deposits grew by ANG 228 million or 19%. The Bank’s risk adjusted capital ratio now stands at 13%. These positive results are a direct reflection of our continuous focus on providing first class customer service, innovative products and services, competitive lending rates and compliance to sound risk management principles.
At Girobank, we believe in making expense management a competitive advantage. Our strategy is to grow efficiently in ways that result in products and services that our customers value. This discipline is expressed by our efficiency ratio, which reflects how much we spend in expenses for every guilder of net operating income we earn. In 2012, the Bank’s efficiency ratio was 65%, which contends with some of the largest financial institutions of the world. The Bank did not cut expenses to meet this feat. We simply struck a balance between managing expenses wisely and spending on what matters most to our customers. We hired people where we saw opportunities for growth or to strengthen our foundation and reduced expenses where these did not add value for our customers.
Corporate Social Responsibility
Corporate Social Responsibility is integral to the success of our Bank and its customers, shareholders and the communities we serve. Our community activities are core to our business, as we continually strive to lead by example. From providing manpower to charitable organizations and to providing financial support, we are making every effort to be responsive to our society. Last year, Girobank contributed an unprecedented 5% of its net income after taxes to charitable organizations, but our social involvement extends far beyond mere financial contributions.
Outlook 2013
We remain optimistic for 2013, although we strongly believe that measures must be taken to improve the investment climate and to incentivize the entrepreneurial spirit. Motivated by yet another quote of Mahatma Gandhi, “You must be the change you wish to see in the world”, Girobank intends to launch a new initiative, the Giro VentureLab. This initiative aims to fill the void experienced by many entrepreneurs that have great difficulty in gaining access to traditional sources of financing. The Bank’s underlying motivation for this initiative is to provide an avenue for prospective entrepreneurs to inspire others with their vision, leadership and achievement, which will result in economic growth and prosperity. The Bank appreciates the value of entrepreneurship and considers the nurturing of entrepreneurs detrimental to the development of economic growth. A fluid private equity market is a driving force that enables entrepreneurs to successfully develop innovations and interesting new business concepts and models. Access to private equity makes an important contribution to sustainable business development, growth, job creation and the greater welfare of society.
This past year’s achievements would not have been possible without the talent and commitment of our people. We are fortunate in having an exceptionally passionate and dedicated team at all levels of the organization that are determined to give paramount service to our customers. So, we would like to take this opportunity to thank our team members, our customers and the communities we serve, the Supervisory Board, and our Shareholders for their continued support. Your confidence reminds us of the reason we are so excited to serve customers each day.
Curaçao, April 23, 2013
The Managing Board of Girobank N.V.
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