|
Union
Bank
UNION BANK OF JAMAICA LIMITED
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2000
5. INVESTMENTS
(a) The analysis of investments by type and maturity is as follows:
|
Period to Maturity
|
|
|
Within 3
months
|
Within 3
to 12 months
|
Within 1
to 5 years
|
Over 5 years
|
2000
|
1999
|
|
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
|
Securities
issued or guaranteed by Government of Jamaica:
|
|
|
|
|
|
|
|
Treasury
Bills
|
|
|
|
|
|
34,487
|
|
Local
registered stocks
|
15,000
|
116,077
|
95,553
|
126,118
|
352,748
|
1,210,198
|
|
Bonds
|
|
|
13,500
|
|
13,500
|
13,500
|
|
US$ bonds
|
|
|
45,480
|
|
45,480
|
49,704
|
|
US$
debentures
|
|
|
|
|
|
108,520
|
|
Development
bonds
|
|
51,000
|
|
|
51,000
|
51,000
|
|
|
15,000
|
167,077
|
154,533
|
294,324
|
630,934
|
1,467,409
|
|
|
|
|
|
|
|
|
|
US$ bonds
and other securities
|
|
|
8,648
|
|
8,648
|
12,426
|
|
Other bonds
and securities
|
|
|
12,280
|
|
12,280
|
86,655
|
|
|
|
|
20,928
|
|
20,928
|
99,081
|
|
|
|
|
|
|
|
|
|
Finsac
Limited:
|
|
|
|
|
|
|
|
Finsac
bonds issued
|
|
|
20,249,083
|
5,469,756
|
25,718,839
|
15,745,509
|
|
Finsac
bonds to be issued
|
|
|
|
|
811,672
|
3,935,495
|
|
|
|
|
|
|
26,530,511
|
19,681,004
|
|
|
|
|
|
|
|
|
|
Other:
|
|
|
|
|
|
|
|
Quoted
|
|
|
|
|
2,009
|
14,974
|
|
Unquoted
|
|
|
|
|
3,907
|
14,432
|
|
|
|
|
|
|
5,916
|
29,406
|
|
|
|
|
|
|
|
|
|
Investments
in Subsidiary Companies:
|
|
|
|
|
|
|
|
- Cost of
shares plus or minus share of results
|
|
|
|
|
|
187,504
|
|
- Advances
|
|
|
|
|
|
260,471
|
|
|
|
|
|
|
|
447,975
|
|
|
|
|
|
|
27,188,289
|
21,724,875
|
(b) The interest rates on Government of Jamaica (GOJ) securities and Finsac bonds are adjusted at interest payment dates by reference to the existing six months treasury bill rates.
(c) The Bank of Jamaica holds securities of The Bank, primarily Finsac bonds, totalling approximately $6 billion and US$20 million as collateral against The Bank's overdraft.
(d) Finsac bonds have been issued pursuant to an undertaking by the GOJ with interest receivable at a rate equal to one percent above the weighted average yield applicable to the latest six-month Treasury Bill tender. The Bank intends to hold these bonds to maturity or sell these bonds at face value plus interest. At balance sheet date Finsac bonds totalling $4.7 billion have been designated as liquid assets by the Minister of Finance pursuant to Section 15 of the Banking Act.
(e) During the year Finsac bonds were issued as follows:
|
|
|
|
|
|
|
Bonds
issued in settlement of interest due on bonds
|
6,019,178
|
|
Bonds
issued for shortfall in assets arising from the merger
|
|
|
of the financial institutions on April 23, 1999
|
|
|
Other
|
1,188,895
|
|
|
|
|
|
9,973,330
|
(f)
Finsac bonds to be issued represent the following:
|
|
|
|
|
|
|
Loans
sold
|
565,818
|
|
Disposal
of subsidiaries
|
153,353
|
|
Other
|
92,501
|
|
|
811,672
|
(g) For the year ended December 31, 2000 approximately $4.5 billion or 85% (1999 - $3.6 billion or 78%) of The Bank's income from securities and loans consisted of interest on Finsac bonds. The interest was settled primarily by the issue of further Finsac bonds. At balance sheet date interest accrued was approximately $1.1 billion (1999 - $2.5 billion) and may be settled by the issue of Finsac bonds subsequent to balance sheet date (Note 10).
At December 31, 2000 Finsac bonds, including accrued interest, amounted to approximately $27.6 billion and accounted for 81% (1999 - $22.1 billion or 68%) of the total assets of The Bank.
The liquidity of The Bank and its ability to fund its operations and achieve profitability are largely dependent on the collection of Finsac bond interest and/or principal which the GOJ, through the Ministry of Finance and Planning, has undertaken to pay in cash to the extent required by The Bank from time to time until The Bank returns to profitability or is sold.
(h) All subsidiaries of The Bank that remained in existence at December 31, 1999 were either wound up during the year, or are being wound up; or were transferred to Finsac, and the primary transfer completed. However, in some instances the transfers are awaiting stamping at the Stamp Office.
6. LOANS
The analysis of loans is as follows:
|
Period to Maturity
|
|
|
Within
3 months
|
Within
3 to
12
months
|
Within
1 to 5 years
|
Over 5
Years
|
2000
|
1999
|
|
|
|
|
|
$’000
|
$’000
|
$’000
|
$’000
|
$’000
|
$’000
|
|
|
|
|
|
|
|
|
|
|
Personal
loans
:
|
361,578
|
74,553
|
81,130
|
3,731
|
520,992
|
985,993
|
|
Business
loans:
|
365,748
|
40,258
|
611,248
|
15,350
|
1,032,604
|
1,181,392
|
|
|
727,326
|
114,811
|
692,378
|
19,081
|
1,553,596
|
2,167,385
|
|
Less: Allowance
for credit losses
|
|
|
|
|
283,657
|
518,177
|
|
|
|
|
|
|
1,269,939
|
1,649,208
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7. PROVISION FOR LOAN LOSSES
|
2000 |
1999 |
|
$'000 |
$'000 |
| Non-performing loans |
278,865 |
547,834 |
The movement in the loan loss provision account during the year is as follows:
|
2000 |
1999 |
|
Balance, January 1
|
588,182 |
233,782 |
| (Write back) Provision
for the year
|
(20,909) |
686,795 |
|
567,273 |
920,577 |
|
Amounts written off during the year (net)
|
(13,057) |
(332,395) |
Provisions released on sale of loans to Finsac
(See Note 19) |
(245,049)
|
- |
|
Balance, December 31
|
309,167 |
588,182 |
Comprising:
|
2000 |
|
|
Specific |
General |
Total |
1999 |
|
$ '000 |
$ '000 |
$ '000 |
$ '000 |
|
|
|
|
|
| Loans |
262,039 |
21,618 |
283,657 |
518,177 |
| Guarantees |
13,383 |
|
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