AGM Chairperson's Report (Speech) for Year 2018

 

It gives me great pleasure to present the 2018 Chairperson’s Report on Development Bank of Seychelles.

2018 was a stellar year for the Bank! We celebrated our Ruby Anniversary which marked a celebration of forty years of progress and achievements. Over the years 40 years, DBS has:

  • Accumulated Assets worth over SCR1 billion;
  • Financed over 8,000 projects worth approximately SCR2 billion;
  • Diversified its loan portfolio from 2 to 8 sectors;
  • Increased its workforce from 8 to 58 employees; and
  • Contributed over SCR250, 000 per year from 2013, to different areas of the society through its Corporate Social Responsibility Program.

 

Having resorted to strict measures in 2017 to increase interest rates on new loans to 11.5%, restricting annual loan budget to SCR100 million and limiting loan amounts to SCR3 million per applicant, the Bank’s lending portfolio decreased in the year 2018. The Bank approved 63 loans worth SCR 36,464,876 million (cf. to 2017 where 69 loans worth SCR 45.7 million were approved).

These stricter measures and increase in interest income have resulted in the Bank outperforming the forecasted net profit by 17% to finish its Ruby Year on a record high with a recorded net profit of SCR26.4 million – the highest achieved in the past ten years!

Although there were signs of the Non-Performing Loans climbing into double digits during 2018, with continued emphasis and efforts on loan collection and recovery, DBS ended the year with Non-Performing Loans standing at 8.2%. This is slightly higher than in 2017 were the NPL ratio stood at 6.7%. The Bank continues to increase its collection and recovery efforts in 2019 and strictly follows its processes where the Bank resorts to legal action to enforce recovery. With regards to other principal financial ratios of gearing, coverage ratio and liquidity all were well within budget for the year and within the norm for the industry as set by the Central Bank of Seychelles.

In 2018, the Bank continued to support the development of small and medium enterprises and the Blue economy. Since its participation in the SME Scheme in 2014, the Bank has approved loans worth SCR625.5 million. The total value of all the loans approved by all financial institutions combined is SCR1.4 billion. Therefore, on its own, the Bank has approved 40.5% of the total number of loans since introduction of the SME Scheme corresponding to 42.9% of the monetary value of SME loans approved.

The Bank in collaboration with the World Bank and the Department of Blue Economy also entered into two agreements in relation to the management of the Blue Investment Fund. The Bank has put in place the appropriate infrastructure and mechanisms for the launching of the Fund together with the Department of the Blue Economy and has launched a call for proposal which will expire at the end of July 2019.

For the year 2018, DBS has maintained its B+ rating certified by the Association of African Development Finance Institutions (AADFI) which started with a D+ in 2010. Following, changes in the methodology in assessing the standards and good governance practices of financial development institutions and coupled with efforts by the Bank to put in place appropriate policies, there is scope for DBS to be rated higher under AADFI for the year 2019.

In 2018, the Board approved for the creation of a new department – Compliance, Risk & Legal Department – that has, as its core function, to ensure that the Bank complies with applicable laws, regulations and rules and plays an essential role in helping to preserve the integrity and reputation of the Bank.

The Central Bank of Seychelles had mandated that all financial institutions adopt IFRS effective on 1st January 2018. The previous IAS 39 classified financial assets based on the characteristics of the instrument and intent whereas the new IFRS 9 considers the business model test and contractual cash flow characteristics test. In contrast to the model under IAS 39, IFRS 9 new impairment model is more forward looking and no longer requires a credit event to have occurred before credit losses are recognised. The Bank must therefore go beyond considering historical and current information and also consider the impact of macroeconomic factors in determining expected credit loss levels. This brings a paradigm shift in determination and quantification of the credit losses. Although DBS, similar to other financial institutions, faced difficulties early in the year to recruit suitable accounting consultants for the implementation of IFR9, BDO was appointed in June, 2018 and worked with DBS, primarily the Finance Department on understanding the new methodologies. The Board approved the Policy Document in January 2019 and the overall effect to the profitability of the Bank for the year 2018 when applying the new impairment provisions was SCR1.9 million.

I am pleased to announce that Baker Tilly (Seychelles) have been appointed as our auditors for the financial year 2018 and the Bank is certain that they will help the Bank conform to the rigorous standards which are essential for the successful operation of the Bank.

The key areas of focus for the Bank in the year 2019 is to complete the modernisation of its head office building at Victoria, introduce new banking software, recruit and continuously train its members of staff to provide professional delivery of our services as is expected by our clients. This requires the Bank to invest to continually grow the Bank to keep delivering on its mandate. Underlining the Board’s confidence on the progress made so far and noting the difficult times ahead in the midst of increased competition and necessary investment projects, the Board has made the necessary decision with regard to its dividend policy to reward its shareholders with a “symbolic” dividend payment by distributing a dividend of SCR 5.40 per share, amounting to SCR 2,115,705 million.

Governance

 

The Bank believes that good governance is essential for achieving long term goals and to enhance value of the Bank. The Bank’s corporate philosophy is to ensure fairness, transparency and integrity in the management of the Bank in order to protect the interests of our stakeholders.

There were 13 meetings held in 2018 and all directors remained committed to the work of the board. It was necessary for the Bank to meet more often in 2018 in order to usher in a number of changes to improve structure and adopt new policies for the Bank. The Board committees were equally very active.

 

 

 

 

Name

Attendance

Brenda Bastienne

13/13

Brian Charlette

12/13

Rupert Simeon

13/13

Rosanda Alcindor

5/8

Ina Barbe

10/13

Roy Clarisse

12/13

Marc Naiken

4/13*

Daniel Gappy

12/13

* Granted leave permission from the Board for non-attendance of 6 meetings

Audit and Risk Committee

The Audit and Risk committee consists of 3 non-executive directors and it met 2 times in 2018. Its members were:

Name

Position

Ina Barbe

Chairperson

Brian Charlette

Member

Marc Naiken

Member

 

The Audit and Risk Committee is a major part of the corporate governance mechanism of the Bank and its function is to oversee the organisation’s audits, internal controls, accounting and financial reporting, regulatory compliance and risk management.

 

 

Remuneration Committee

The Committee is made up of 3 non-executive directors and met 4 times in 2018. Its members were:

Name

Position

Rupert Simeon

Chairperson

Roy Clarisse

Member

Rosanda Alcindor

Member

 

The major function of the Committee is to assist the Board of Directors in developing and administering a fair and transparent procedure for setting policy on the overall human resources strategy of the Bank.

Board Changes

Since the last Annual General Meeting, Ms. Rosanda Alcindor has been removed as a Board director effective on the 23 August 2018 and Ms. Nicholle Belle and Mr. Ashwin Bandheri have been appointed as new Board members effective on the 25th March, 2019 and 25th April, 2019 respectively.

Other Significant events after the reporting period

The Government of Seychelles announced the transfer of responsibilities from the Small Business Financing Agency to the Bank in the Budget Speech for the year 2019. The Bank worked diligently with the Ministry of Finance and the Office of the Attorney General and a Small and Medium Enterprise Development Fund was created, and its responsibilities transferred to the Bank early in April 2019.

On the 29th April 2019, DBS issued two bonds – 6.00% Three Year and 6.5% Five Year – through the Central Bank of Seychelles which were both fully subscribed and saw the participation of both retail and institutional investors.

 

 

 

Supporting our people      

 

The Bank acknowledges that its success relies on the efficiency of its workforce, hence, its commitment to continuously invest in the development of its employees. A series of in-house training was organised during the year 2018 in key areas such as Risk Management, Anti Money Laundering & Terrorist Financing and Blue Investment. Members of staff also attended training at institutions both local and abroad focusing on areas such as asset & liability, project management, managerial skills and development finance. Some members of staff are also enrolled on professional courses in order to attain ACCA qualifications. Some of DBS’ staff are even undertaking post-graduate studies at the University of Seychelles and the Guy Morel Institute and following online graduate courses.

Being, a socially responsible organisation, DBS also strives to give back to the community through donations and sponsorship of various causes such graduation ceremonies, medical expenses for the less fortunate, sports awards and adoption of the elderly home at Grand Anse Praslin.  In 2018, DBS invested SCR200, 000 in local communities through donations and sponsorship in different areas of the society.

Final remarks

 

In concluding this report, I wish to thank my fellow Board Directors, management and all members of staff of the Bank for their continued hard work and dedication towards the Bank.

I also wish to thank you, our valued shareholders, for your support, patience and understanding which would enable us to lead the Bank to a better place and cement our leadership for the Bank to continue to be “a partner” in the development of the Seychelles’ economy. Our achievements would not have been possible without your unfailing support.

Thank you

By Chairman of Board of Directors - Ms Brenda Bastienne