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Director's Report

Following the challenges of the year 2009, the global economy is now slowly emerging from its deepest recession in decades. The real gross domestic product (“GDP”) growth of 4.8% in 2010 was primarily driven by a robust growth of the real GDP in the emerging and developing countries such as Brazil that posted a gain in GDP of 7.5%.

The US economic growth picked up notably in the last quarter of 2010. However, despite a GDP growth of 2.6% in 2010, the unemployment rate has remained close to 10%. Consumer confidence unexpectedly declined in December 2010, a sign that the US economy may struggle to sustain momentum in 2011. The recovery in the euro-zone as a whole has continued with a real GDP growth of 1.7%, but divergences between the core and peripheral economies are growing. With the core economies resistance to adopting bolder policies to assist the weaker euro economies, concerns about the future of the euro are likely to intensify. The outlook for emerging markets is characterized by robust growth driven by strong domestic demand.

Locally, we experienced the dismantling of the Netherlands Antilles, the creation of two new countries, Curaçao and St. Maarten and the integration of the BES islands (Bonaire, St. Eustatius and Saba) into the Netherlands. A major consequence of this process was the government debt relief program that resulted in a reduction of the public debt to GDP ratio from 82% to 34%. Curaçao posted a GDP growth of 0.4% in 2010, combined with an inflation rate of 2.7%. Real GDP growth for 2011 is projected at 0.6%. The relatively stagnant growth is influenced by the uncertainty with respect to the sustainability of the recovery of developed nations. Higher domestic energy prices are expected to drive the inflation rate to 4.8% in 2011. The prospects for long term economic growth are positive given the current level of public debt and the projected government budget surpluses.

In conjunction with the dismantling of the Netherlands Antilles, the US dollar was introduced as the legal tender of the BES islands as of January 1, 2011. Curaçao and St. Maarten continued the use of the Antillean guilder pending the introduction of the Caribbean Guilder.

Solidify our position

During the year 2010, Girobank experienced a change in the composition of its ownership with the International Investment Group LLC (“IIG”) acquiring the shares, previously held by the Totalbank Group. IIG is a leading investment management firm based in New York, USA. APNA and the Government of Curaçao continue to hold a share in Girobank. With the change in ownership came a change in the composition of our Supervisory Board of Directors. Mrs. Maria Graciela Gill La Rosa, Mr. José Santiago Nuñez Gómez, Mr. Bernardo Avalos Gutierrez and Mr. Rafael Gill Ramirez resigned from the Board of Directors as of July 19, 2010. During the year, we welcomed to the board, Mr. Ivan de Windt (Chairman), Mr. Willem van Bokhorst (Vice chairman), Mr. Martin Silver and Mr. David Hu. The year 2010 also brought a change in management. Mr. Manuel Suena Cagiao, Managing Director, and Mr. Victor Gill Ramirez, Managing Director, departed from the bank as of December 1, 2010 and July 19, 2010, respectively and we welcomed Mr. Stephen Capella, Managing Director, to the management team of Girobank. We would like to express our gratitude to our departing Board members and members of the management team for their invaluable efforts during these past years.

In 2010 Girobank further solidified its position in the local markets. The Bank’s total loan portfolio increased by 25% and its capital ratio is robust at 10%. The Bank’s net income after taxes rose by 35% to ANG 15.9 million. Consumers, small and medium-size businesses are vital for the growth and stability of our economy. Girobank is ready to assist clients in furthering their goals within the scope of a sound financial plan. In 2010, our portfolio of consumer loans grew by 78%. We continued to offer customized solutions to our corporate clients based on the principal goal that not only do we want to be the lender of choice but foremost we want to be your trusted business advisor. The trust placed in Girobank by the corporate community is reflected in the growth of our corporate loan portfolio of 20%.

We enhanced our risk management framework, which resulted in an improvement of the quality of our loan portfolio. Our income statement reveals that our net interest margin grew by 13%. This increase is mostly driven by a decrease in the bank’s interest expenses. We have seen a significant reduction in the interest rates, internationally but also locally. We have passed these benefits to our customers in the form of lower lending rates. Despite the significant increase of our loan portfolio (25%), our interest income increased by only 2%. We believe that satisfied customers will become loyal advocates of Girobank. Despite the significant increase in business and the opening of additional branches, our operating expenses decreased by 3%. The bank’s efficiency ratio improved by 30 basis points.

Committed to our client’s financial stability

At the core of our business as a bank, stands our commitment to our clients. The financial stability of our clients is our number one priority. Girobank continued to promote saving as a way to achieve long term financial stability. Staying true to our principals, we launched the bank’s consumer mortgage program starting at a very competitive rate of 5%. Excessive rainfall caused quite some damage on various parts of our island. As part of our commitment to the community, we temporarily reduced interest rates by 50% for those who suddenly found themselves in need of a loan to cover unexpected repairs and reconstruction.

Pay it forward

A strong community is the cornerstone to economic growth. That is why we will continue to support community development programs and volunteerism of our staff. Our youth savings plan “Oinki”, celebrated its fifth year of existence. To celebrate this fact, we chose to make donations to the Caribbean Youth Foundation, the SOHK foundation, the Bruder Pius House and the Public Library in Curaçao and FESBO in Bonaire.

Girobank is a strong advocate of investment in education as a means to further the development of our community. Girobank’s scholarship foundation, “Fundashon Bo Motivashon Nos Kontribushon”, (Your Motivation, Our Contribution) continued to provide financial support to nine students of which two are pursuing a college degree and seven a high school degree. We are proud to report that during the year, one of our scholarship recipients obtained a medical degree.

Mobile banking: your branch anytime, anywhere

We live in a world where services must be available anytime, anywhere. Our products and services aim to fit today’s mobile lifestyle. Currently, the most widely used phone application is the “short messaging services” or “SMS”. With this in mind, we developed the SMS-based mobile banking service. Girobank enables its clients to monitor transactions on their accounts by sending alerts seconds after such transaction took place. You can also access your account balance from the convenience of your mobile phone.

Outlook 2011

We believe that 2011 will be a year of many opportunities. The projected budget surplus of ANG 50 million provides a unique opportunity for the Government to intensify investments in physical infrastructure, improvements of the educational system and socio-economic projects. We encourage the Government to continue its efforts to implement tax reform, eliminate bureaucratic red-tape, and implement measures to improve the investment climate, control health care spending and reform the social security system.

Our vision for Girobank is simple. It is the collective effort of the Girobank team working together to offer the right solutions for our clients; customers entrusting us with their new ventures or needs; staff choosing to build their careers here because they believe this is the best workplace; and community leaders acknowledging that Girobank is a vital business partner to drive their success. Our challenge is to help all of the aforementioned stakeholders achieve their goals and realize their dreams.

We would like to extend our heartfelt gratitude to our Shareholders and Supervisory Directors for their support; to our employees for their outstanding effort and commitment to the bank; and especially to our reason for existence - our clients- whose confidence and support are of immense value and essential for the growth and profitability of our bank.

Managing Board of Girobank N.V.,

Curaçao, March 3, 2011

Eric L. Garcia                                                  Stephen A. Capella

President and CEO                                         Managing Director and CFOO

Read our Financial highlights 2010 please click here
Read our Financial highlights 2009 please click here
Read our Financial highlights 2008 please click here
Read our Financial highlights 2007 please click here
Read our Financial highlights 2006 please click here
Read our Financial highlights 2005 please click here