It gives me great pleasure in presenting to you the Report and Financial Statements of the New
Building Society Limited for the year ended December 31, 2008.

Economic Review:

Global Economy - The economic meltdown among major world players has resulted in reduced global growth for 2008 which was 3.4%. This was much lower than the 2007 figure of 5.2%. While there was average growth of 6.3% in developing economies largely led by China and India with 9.0% and 7.3% respectively, the same was much lower in the developed countries with overall growth of 1.0%, while the USA economy grew by 1.1%. The dramatic slowdown in global economic activity especially during the latter part of 2008 has contributed much to the downward revision in global outlook. Growth is thus expected to be lower at 0.5% in 2009.

Domestic Economy - There was real growth of 3.1% in 2008 following growths of 5.1% and 5.4% in 2006 and 2007 respectively. Of note is the fact that non-traditional domestic products grew by 5.9%. There was decreased production in areas such as sugar, forestry and bauxite which was however, compensated for by increases in rice, mining and quarrying, construction and communication. For 2009, it is projected that inflation will be 5.2% with growth in Real GDP of 4.7%.

The inflation rate at the end of 2008 was 6.4% which was less than half of that for the previous year of 14.0%, and was largely as a result of the drastic reduction in fuel prices during the latter months of the year.

Depreciation of the Guyana Dollar vis-à-vis the US Dollar was a modest 0.86% and the average market mid-rates for the US Dollar, depreciated by 0.26%. However, there was a marked reduction in the rate with respect to the Canadian Dollar, Pound Sterling and Euro by 13.61%, 23.70% and 6.94%, respectively. This massive depreciation of the pound sterling in particular had an impact on our performance.

Financial Highlights:

The Society made a profit of $288M, despite the global financial meltdown facing the world economy which had a crippling effect on the international banking sector. As mentioned earlier, the massive depreciation of the Pound Sterling, resulted in an exchange loss of $200M on our investments in the United Kingdom which are held by us for several decades. It should be noted that there was an exchange gain of $130M in the two previous years, as a result of the high exchange rates which prevailed for the Pound Sterling for those years.

Our profit for the year 2008 can be considered reasonable given the fact that the money market suffered immensely as a result of the financial meltdown and currency fluctuation in economies around the world. Despite the society’s returns for the year and our set backs, due to the devaluation of the pounds sterling, our objectives remain to ensure that both our borrowing and saving members benefit maximally from the products and services that are offered by us. With our core business being to provide mortgages on affordable terms, we further reduced our rates to borrowers from January 1, 2009 to 6.95% and 4.95% (in the case of low income loans) to make their repayment
more affordable. It should be noted that this consistent reduction in the mortgage lending rates moved from 11% in 2001 to the current unprecedented low level.

The Society has also secured the approval of the Ministry of Finance to increase our lending ceiling from $8.0M to $10.0M, an amount which was approved by the membership in 2006. We are hoping to further increase our ceiling from $10.0M to $12.0M, as listed on the Agenda under Item 8, in an effort to meet the demands for the construction of more middle income houses.

Our mortgage portfolio recorded an increase of 12.0% compared to the previous year of 7.0% and now stands at $19.0B as at 31st December, 2008. Savings also grew by 6.0% and is currently $30.5B or 86% of Total Assets, a percentage which has been stable over the years and which demonstrates the overwhelming confidence the majority of members has placed in the system.

Our Assets grew by 6.0% for the year and is currently $35.6B, while our reserves stood at $4.8B, representing 13% of Total Assets or 16.0% of members’ funds. This ratio is ranked among the highest in the financial sector and will of course serve us well should there be any unforeseen expenses that the Society may incur in the future. Growth in the various areas of the Society is accompanied by strict monitoring of our total operations which allowed us to remain financially sound during 2008.

Barring the exchange loss which was beyond our control, we have done remarkably well operationally where new advances to members were $3.9B, the highest achieved in any one year of the Society’s history. Liquidity is 40% of Total Assets or 47% of members’ funds, a position exceeding the approved industry standard. This enhanced liquidity places us in a financially sound position and would allay any fears concerning our operational viability.

 Our Members:

The Society has always endeavoured to offer personalized services to our members and to adopt best practices when it comes to treating customers fairly. As we have mentioned before, our new Head Office at Lots 1 & 2 North Road has finally began to take shape and will be constructed by BK International to better service our membership. We remain committed to our mutual status where we operate primarily in the core markets of personal savings and residential mortgages leading to optimized benefits for our members.

Staff:

We are of the view that our employees are very important to us in attaining our business objective of
serving our members in the best possible way. While attrition has equally affected everyone in the financial sector, we have been ensuring that there is succession planning in all areas of operations to achieve continuity of service. We have on a regular basis ensured departmental training and reimbursement to our staff on improvement of their own academic qualifications relevant to the Society’s operation. We would like to thank our staff for their dedication and commitment.

Social Responsibilities:

Our corporate responsibility reflects our commitment to charitable and educational institutions in the communities in which we serve. During the year we have disbursed over $6.5M to several organizations all over the country with a substantial amount going towards the rehabilitation of the Theatre Guild which has been in a derelict state for many years. We will continue to assist in every way possible to various causes as members would normally approve amounts each year for this purpose.

The Future:

As a result of the unprecedented turmoil in Global Financial Markets, the local economy will naturally be affected especially as it pertains to remittances from abroad to families in Guyana. However, the Society has always adopted responsible and prudent approaches to its operations to counter any adverse development in the economic and financial environment.

We are restricted in the areas where we can invest and the consequence has always been on us having large deposit portfolios in the local banking sector earning minimal rates of returns. The similar situation exists with returns on our investments in Treasury Bills. We were, however, fortunate that the Berbice Bridge Act made legal provisions, to allow us to invest in the bridge through the purchase of high yield interest bonds. Consequently, the Society took the decision to increase our investment in the bridge by another $1.52B to make our total investment in the bridge $1.87B. Contrary, to the negative comments made by some detractors, this investment is sound and will greatly enhance returns to our members.

In his budget presentation for 2009 the Minister of Finance indicated that the sum of $1.6B will be allocated to the housing sector. This will assist in providing easier access to affordable housing, increased occupancy and construction in existing and new housing areas and improve the quality of infrastructure in both housing schemes and squatter settlements. It is expected that in excess of 2,000 house lots will be allocated and 2,500 land titles distributed during the year. Of the amount allocated, $1.2B will go towards infrastructure works, including roads, drains and water distribution networks, in areas such as Onderneeming, Cummings Lodge, Glasgow, Bell West and Parfaite Harmonie, areas where we have already granted numerous mortgages. This will go a far way in encouraging occupancy by those who have been allocated house lots and by extension affording us the opportunity for greater mortgage processing. With a strong balance sheet, we are well placed to support our members during difficult times and also to take advantage of opportunities that may arise.

Conclusion:

We have a prudent mortgage lending policy and quality mortgage assets along with a stable and safe savings operation. I remain confident that despite all the global problems, we remain on track to meet our objectives in 2009 and in so doing deliver maximum values to our membership. Finally, I would like to thank my fellow Directors, management and staff for their unstinted support during the year under review and look forward to their co-operation during 2009.