The Bank recorded another year of impressive growth performance in its lending operations as loan disbursements topped the J$6.0 billion mark for the first time in the Bank’s relatively short history. This performance is particularly gratifying as the Bank faced numerous challenges during the 2009 financial year, most notable of which  was the unprecedented financial crisis which affected banks and other financial institutions globally.  Jamaica was not spared the impact of the global “financial tsunami” as almost all areas of the local economy recorded significant reversal during the period.  In addition to the significant challenges posed by the external environment, the Bank encountered its own set of internal challenges, chief among which was the difficulty in sourcing low-cost Jamaican Dollar funds to meet the expanded demands of its customers for local currency loan funds.  As a result of its funding limitations, the Bank was forced to curtail its lending activities for the second half of the year.  That the Bank was able to increase its loan utilization by 35% to J$6.5 billion in such an unfavourable operating environment, is a tribute to the skill, tenacity and dedication of its cadre of committed staff and management. Improved performance was recorded in almost all areas with the most significant growth being reflected in the Bank’s foreign currency loan portfolio which increased by US$5.63 million (approx, J$500.0 million), or 20%.

FINANCIAL PERFORMANCE

Revenue
Consistent with the strong growth achieved in its lending activities for the 2009 financial year, the Bank recorded a 16.4% increase in interest income which moved from J$435.7 million in 2008 to J$507 million at year end 2009.  Interest expense ended the year at J$207.6 million, an increase of 26.1% over the figure of J$164.7 million reported in 2008.  Net Interest Income closed the year at J$299.3 million, an increase of 10.4% over the figure of J$271.1 million achieved the previous financial year.

Other Income
The Bank’s financial out-turn was negatively impacted by foreign exchange losses of J$140.2 million incurred during the review period.  Arising from these losses, the Bank’s Operating Profit declined by some 28.7% moving from J$239.2 million in 2008 to J$170.6 million at year end 2009.  The reduced operating income coupled with the 9.3% increase in administration expenses of J$228.2 million (2008: J$208.8 million) resulted in the Bank reporting a loss of J$41.2 million at year end 2009 as against a net profit of J$17.5 million reported for the previous financial year.

Earning Assets
For the financial year ended 31 March 2009, the Bank’s total assets were reported at $7.43 billion, which is an increase of 37.6% over the $5.4 billion recorded the previous year. A notable increase was recorded in Notes Discounted which was reported at $2.03 billion, a 95.2% increase moving from $1.04 billion in 2008. The medium term portfolio continued to record increased results reflecting loans of $1.17 billion at year-end 2008, an increase of 14.7% over the figure of $1.02 billion reported the previous year.  A significant increase was reported for Cash and Cash Equivalents due the Bank receiving funding from the Inter-American Development Bank (IDB).

Shareholder’s Equity
At year-end 31 March 2009, Shareholder’s Equity was J$1.64 billion, reflecting a marginal reduction from the J$1.7 billion  which was reported the previous year.

REVIEW AND ANALYSIS OF LENDING OPERATIONS
 
For the period ended 31 March 2009, the Bank recorded loan disbursements of J$6.5 billion, reflecting an increase of 35% over the results of $4.8 billion achieved for the 2008 financial year. This performance marked the continuation of a growth trend guided largely by the implementation of the Bank’s three year (2008-2010) Strategic Plan “Vision 2010.” Loans disbursed under the various foreign and local currency facilities totaled US$33.83 million and J$3.56 billion respectively, and when compared to the previous year’s performance, represented an increase of 20% and 28% on foreign and local currency lending respectively. 
 
 The laudable performance under the Bank’s Foreign Line of Credit facilities continued to be largely attributable to disbursements made to facilitate the importation of raw material, spare parts and capital goods for the productive sector. The Bank’s foreign currency lending activities was also bolstered by utilization under the Cuban Line of Credit, as disbursements of US$6.45 million exceeded projections of US$4.0 million by US$2.45 million or 61%, and surpassed the previous year’s performance by 34.4%. The Bank is encouraged by the interest shown in the Cuban Line of Credit by local exporters evidenced by the expansion in the range of products financed. Agricultural chemicals which are vital to the maintenance of Cuba’s large agricultural sector continued to be the main items financed under the line. 
 
On the local currency side, disbursements under our short term and medium term facilities exceeded the prior year’s performance by 34.6% and 28.4% respectively. Of notable mention is the fact that disbursement under the Bankers’ Export Credit Facility, a short-term facility which is offered through our AFIs, increased by 195.4% moving from $175.71 million at year end 2008 to $519.01 million at year end 2009.
 
Significant growth levels in disbursement were also reported under the JEA/JMA Loan Programme which provide funding, on an unsecured basis, to small and medium sized companies engaged in productive endeavours which would otherwise experience difficulty in securing loans from the commercial banking sector.  Loans disbursed under this facility during the review period were reported at $24.33 million, reflecting an increase of 77.6% over the 2008 results when disbursements of $13.7 million were achieved.    
 
National Insurance Fund (NIF) Credit Facility
During the 2009 financial year, the Bank disbursed its full allotment of J$100.0 million under the NIF Credit Facility. The rate of interest offered under the facility to the end user ranged between 8% - 10% per annum. The demand for these funds exceeded the Bank’s allotment and resulted in the Bank approaching the NIF Secretariat for a further $38.0 million tranche. At year end, disbursements under the facility totaled $105.5 million.  A wide cross section of sectors, including IT Services, manufacturing, agro-processing and the apparel sector benefited from these funds to assist with the acquisition of capital goods as well as for working capital.
 
Trade Credit Insurance
In an effort to revitalize the Bank’s Export Credit Insurance (ECI) product and in response to a current need in the marketplace for new and innovative ways of obtaining financing, the Bank expanded its insurance product to incorporate Domestic Credit Insurance (DCI) and the product was renamed Trade Credit Insurance (TCI). In addition to providing insurance protection against commercial risks of non-payment by foreign buyers, TCI now allows for insurance protection against commercial risks of non-payment by local buyers. TCI protects the productive sectors of the economy from the risk of non-payment, and to encourage the expansion of trade by ensuring the viability of businesses which may otherwise incur losses. The policy covers 85% (commercial risk) and 90% (political risk) of the loss amount with the policyholder assuming the remaining 15% and 10% respectively.  The TCI offers coverage at more competitive premium rates and continues to facilitate the discounting of receivables through the Bank’s Insurance Policy Discounting Facility (IPDF).
 
The Insurance Policy Discounting Facility (IPDF) is a post-shipment financing scheme which allows companies that are engaged in the export of non-traditional goods and services and are policyholders in good-standing under the Bank’s Export Credit Insurance scheme to obtain short-term working capital loans.  These loans are available for up to 80% of the invoice value for goods sold to approved buyers.  Loans disbursed under this facility during the review period were reported at $43.51 million, reflecting an increase of 31.8% over the $33.02 million reported for 2008.  Several policyholders have benefitted from this loan programme and the Bank continues to encourage exporters to become policyholders so that they benefit from both the insurance coverage available under the policy as well as financing with the Insurance Policy being used as security.  
 
Reinsurance Quota Share Treaty
As a part of its risk mitigation strategy, the EXIM Bank continued to maintain its re-insurance arrangement with overseas insurance carriers which have underwritten EXIM’s insurance portfolio under a Quota Share Agreement whereby the Bank cedes 60% of its premium income for 60% of its insurable risk, both of a commercial and political nature.

HUMAN RESOURCE DEVELOPMENT

As part of a continuing effort to reinforce the cultural transformation which was initiated in 2004, on October 17, 2008, the Bank launched a staff recognition programme, to recognize and award staff members who in their interaction and behaviours, best demonstrate the living of the Bank’s core values.

Additionally, being mindful that we are in the era of the knowledge worker, the Bank continued to make significant investment in the training and development of staff.  For the period in question, fifty-nine (59) members of staff participated in sixty-three (63) training/development programmes.  These programmes were primarily influenced by the need to address certain gaps identified from a competency gap analysis completed in the latter part of financial year 2007.  The menu of training/developmental activities inclusive of courses, seminars, workshops and conferences covered a number of areas such as leadership and management, information technology, accounting, auditing, other technical skills, as well as behavioural skills, and should go a far way in equipping the staff with the required skills to enable the Bank in its quest for service excellence.

CORPORATE CITIZENSHIP
The Bank continued its social outreach to the wider community by way of financial contributions to entities such as the Leila Tomlinson Wareika Hill Basic School, Missionaries of the Poor, Women’s Centre of Jamaica Foundation and United Way of Jamaica.