The 2009 financial year was not without its challenges as the global financial crisis impacted the local financial and productive sectors resulting in a tightening of liquidity and reduced availability of credit options.  These developments had an adverse impact on the Jamaican economy, as inflation for fiscal year ended 31 March 2009 remained at an elevated level and was reported at 12.4%, the value of the Jamaica dollar declined by approximately 25% against the United States Dollar and the country’s Net International Reserves stood at US$1.62 billion, declining by approximately 22% over the fiscal year. 

Financial Highlights
Despite these challenges, the EXIM Bank is exceptionally pleased to report that it achieved loan utilization of $6.5 billion, surpassing its budget of $6 billion and reflecting an increase of 35% over the $4.8 billion achieved at financial year end March 2008.  This performance contributed to increased interest income of $507 million, up from $435.7 million recorded the previous year and resulted in an operating profit of $170.6 million. Due however to foreign exchange losses occasioned by the sharp devaluation of the Jamaica Dollar, the Bank recorded a net loss of $41.2 million compared to a net profit of $17.5 million achieved in 2008.  In observing sound risk management principles, the Bank was able to contain its provision for loan losses at 2% at financial year end.   Shareholder’s Equity was reported at $1.6 billion approximating its position of $1.7 billion reported at previous year end 2008. 

Strategic Initiatives 2009
This year saw the continuation and enhancement of many initiatives undertaken the previous year and the commencement of new strategic initiatives aimed at promoting EXIM as a customer focused, secure and viable financial institution. The Bank continued to employ prudent management measures to maintain its viability, responding to opportunities to finance industries with export potential, while engaging in cost containment measures, closer monitoring and more regular interface with clients to avert and minimize loan delinquencies.
Special emphasis was placed on the development and expansion of small and medium sized enterprises which provide vital links to the productive sectors of the economy. During the year, the Bank rebranded and upgraded the SME loan facility, by broadening the eligibility criteria, and increasing the loan limits which resulted in increased demand.    Loan disbursement requests had to be curtailed however, due to limited resources. As a result of the impact of the global financial meltdown, a contraction of credit was also experienced from the Bank’s overseas correspondent banks which facilitate short-term Line of Credit transactions.

Several initiatives were therefore pursued to obtain funding at competitive rates of interest to keep the productive wheels of the economy turning.  In this regard, the Bank obtained additional loan funds of $1 billion from PetroCaribe to augment the US$12 million previously accessed for onlending to the productive sectors, with a focus on small and medium enterprises.  Additionally, having fully disbursed $100 million in loan funds received from the NIF in 2008, the Bank was successful in obtaining a further $38 million in loan funds, $27 million of which has been committed with the remainder to be loaned in the upcoming financial year.  The Bank also successfully negotiated a US$10 million Line of Credit through Sovereign Bank of the United States of America (USA) to facilitate the importation of raw materials and capital goods from the USA.   In the last quarter of the financial year, approval was received from the Inter-American Development Bank (IDB) for loan funds of US$43 million to provide working capital support for the productive sectors, US$18 million of which was fully drawn in this financial year.

We are also pleased to report that a Framework Co-Operation Agreement on Trade Financing was executed between the EXIM Bank of China and EXIM Bank Jamaica which aims to foster and promote bilateral trade between both countries.  Under this arrangement, Jamaica can access up to US$100 million in Trade Financing from China. 

During the 2009 financial year, the Bank also intensified its efforts at greater collaboration with agencies such as the Jamaica Business Development Corporation (JBDC) and the Scientific Research Council (SRC) to establish viable, risk-sharing agreements to encourage the development of entrepreneurship.  The JBDC and the Bank signed a 60:40 risk sharing agreement to facilitate financing of JBDC’s craft manufacturers contracted to provide products specifically for JBDC’s Things Jamaican Shops. 

The Bank introduced more efficient use of information technology to streamline business processes and improve credit monitoring capabilities.  A new website for the Bank was developed and uploaded onto the ‘world wide web’ in October 2008.  This new site provides current information on products and services not only to the general public, but also boasts a new secure section specifically targeted to the Bank’s network of Approved Financial Intermediaries (AFIs). Of particular interest, is the fact that this new site allows customers to submit online loan applications. 

Ongoing marketing and promotional activities continued to increase awareness of the Bank’s loan products and services and contributed to increased demand for its loan products.  A mass media marketing programme was supported by highly successful seminars hosted by the Bank on relevant topics such as Intellectual Property and Trade Credit Insurance.  Throughout the year, the Bank continued to strengthen its relationships with its Approved Financial Intermediaries (AFIs), which remain important partners in achieving loan growth.  In keeping with best practices, in October 2008, EXIM Bank by an Order of the Houses of Parliament, was designated as a financial institution under the Proceeds of Crime Act (POCA) and its Regulations.

Trade Credit Insurance
This year, in keeping with the strategic initiative to provide innovative products and services, the Bank introduced Trade Credit Insurance (TCI).  This product is essentially an enhancement of its predecessor Export Credit Insurance, as it incorporates a new offering – Domestic Credit Insurance.  The new Trade Credit Insurance which became effective 01 August 2008, offers coverage on buyers both overseas and in the local market.  A working capital financing product as a corollary to Trade Credit Insurance, collateralised by the assignment of the insurance policy and insured receivables from buyers, is also available to policyholders.

Looking to 2010
The 2010 financial year will represent the third and final year of the Bank’s “Vision 2010” Strategic Plan which has been characterized by innovation and unprecedented achievements. Present indicators suggest that the financial year will continue to be impacted by the global financial crisis and will continue to pose challenges for both lenders and borrowers.  Notwithstanding, loan portfolio growth will continue to be the Bank’s primary focus, but within the context of known constraints, a modest growth target of 10% in utilization to US$7.2 billion is projected for the upcoming year.  The Bank will continue to support the productive sectors of the economy with emphasis on the Agro Processing Sector which has demonstrated significant potential for export earnings, employment creation and the development of both backward and forward linkages within the agricultural sector. Initiatives to develop innovative products and services will be pursued and to this end the Bank will continue its collaboration with stakeholders in the creative industries with a view to leveraging Intellectual Property as a sound basis for providing financial support to aid their growth and development.

As a primary short term lender, the Bank will endeavour to manage its portfolio mix so as to ensure that its mandate as a short term lender can be successfully executed. The sourcing of attractively priced funds on favourable terms and conditions remains a priority for the Bank as it impacts all aspects of the Bank’s operations.

Through its marketing and advertising programme, the EXIM Bank proposes to maintain its branding presence and keep the public informed of its products and services geared to assist not only exporters but a gamut of producers and entrepreneurs to realize their productive promise.

International Arena
In recognition of the importance of being au courant with trends in the international trade credit and insurance arenas, the Bank has maintained its association with international umbrella organizations through which the exchange of information and industry data with other EXIM Banks  are facilitated.                                                                                                                                                                                                                                                                                                                                                                                                                  

The Bank therefore remains a member of the Berne Union, an Association of International Credit and Investment Insurers as through this membership, the Bank keeps abreast of new methodologies and best practices in the international trade credit insurance market.  In 2007 the Bank was elected to serve on the Berne Union Management Committee and will remain an active member of this Committee until October 2009.

The Bank is also one of the nine (9) adherent members of the Latinamerican Association of Export Credit Insurance Organisation, ALASECE, a non-profit private entity which comprises fourteen (14) active members that offer export credit insurance in Latinamerica and the Caribbean.  Through this association, the Bank exchanges information with other members on developments in trade credit insurance and trade financing.

Acknowledgements
The Bank is proud of its many accomplishments to date, in particular, its contribution to foreign exchange earnings through the financial support given to clients, which for the first time in its 23 year history, exceeded the J$6 billion mark.  This exceptional performance, achieved in challenging times, is attributable in large measure to the hard work and dedication of the Management and Staff of the Bank, under the sound guidance of the Board of Directors.   I salute them all and look forward to continued, successful operations in the coming year.

Pamella McLean, CD
Managing Director
National Export-Import Bank of Jamaica Limited