The fiscal year ending on 31st of December 2001, which is the 9th accounting period for the Bank, was performed in an environment characterised by a slackening of the economy.

The sharp drop of national production and the continued freezing of external funding counteracted the optimism brought about by the Arusha Peace Accord signed on November 28, 2000, with the accompanying World Bank Emergency Credit for National Economic Recovery.

Despite the downswing of the economic environment, the Bank pursued its activities in a somewhat sustained way, continuously adapting its structures and strategies.

On the commercial aspect, the Bank kept strengthening its branches network .Two IBB branches were set up in 2001, one in Muyinga in May, and the second in Buyenzi, Bujumbura, three months later, and a new supervision team was put in place.

Concerning the management aspect, INTERBANK BURUNDI particularly strengthened its risk monitoring instruments for the Bank's overall activities, i.e. credit risks, liquidity risks, administrative and operational risks.

The achieved outputs are rather satisfactory, although they are lower than the 2000 fiscal year.

Members of the Board of Directors

- Georges COUCOULIS, Chairman (third from right) - Callixte MUTABAZI, Managing Directorl (third from left) - Bonaventure NICIMPAYE, Director (second from right) - Arturo COSTA, Director (second from left) - Jean-Michel VIDAL REBATTU, Director (first from right) - Marguerite RUMBETE, Director (first from left

RESOURCES POLICY

Given the nature of the economic environment, the resource market remained tightened during the whole 2001 fiscal year.

Induced by increasing competition over deposits, the tensions were aggravated by reduced individual refinancing lines for banks, as well as the Central Bank intervention on the deposit market through the very favourable terms offered on treasury certificates.

The average rates for the above certificates increased from 12% to 19% respectively in December 2000 and December 2001 for a three months investment period.

The strengthened customer supervision and the widened distribution network through the setting up of Gitega, Muyinga and Buyenzi branches positively counterbalanced the impact of tensions on resources. As a result, the fiscal year ended with an outstanding deposit of 24,714.1 M, i.e. a 17.7 % increase.

CREDIT RISK MANAGEMENT

For the 2001 fiscal year, the Bank's policy as regard to credit risks fell within the Programme "Risks Control Reinforcement" initiated since the beginning of the year.

Risks Control

Following the work started the previous year, the bank customers' officers proceeded again with an inventory of credits and prioritised them by degree of risks. As a result, targeted actions were initiated, such as the organisation of meetings with some categories of debtors.

Credit Administration

The decentralisation of the credit administrative management initiated in 2000 within Bujumbura branches was extended to the branches upcountry. This allowed customers in Ngozi, Kirundo, Gitega and Muyinga to benefit from deadline standards in force at the headquarters.

Credits Outstanding

The demand of credits was sustained throughout the year, and was influenced, at least during the first semester, by the need of foreign currency, the substantial money depreciation, petrol stock restocking, as well as new financing needs resulting from the opening of new branches in Gitega, Muyinga and Buyenzi.

The outstanding debt at the end of December 2001, amounted to 24,970.6 M against 21,546.4 M as the 31st of December 2000, i.e. 15.9% increase.

SERVICES

International Banking

International Banking was highly affected by the shortage of foreign currency resources.

Within this shortage context, the Bank's attention was geared towards judicious use of foreign currency and equitable allocation of foreign currency funds, with an emphasis on financing the petrol stock restocking, raw materials for customer industries, building materials, etc.

Counter Operations

Collecting operations are now carried out on ten counters instead of eight counters in 2000. Because of the widening of networks and the subsequent timetables, cash flows generated by the ten counters were highly sustained: the total payments and transfers to the Central Bank (BRB) in order to supply our current account amounted to 28,453.4 M against 24,707.9 M in 2000, with a daily cash peak of BIF 1,600 M.

Based on the statements of security swap clearing, INTERBANK BURUNDI payment orders constantly represent 50% - in number and value - of all circulating payment orders.

This percentage was 45% in 2000.

Branch Network

With the settlement of branches in Muyinga, in May, and in Buyenzi three months later, the Bank completed and strengthened the existing synergies between our relations in the northern area of the country and those in the economic and political capital city.

In so doing, the Bank is now in a position to facilitate and promote trade-offs between the main markets in Bujumbura and the most trading cities upcountry, thanks to its interconnected branch network.

The total cash flows generated by these computer and radio links amounted to 32,948.0 M, against 22,055.7 M the previous year, i.e. 16,240.5 M for Ngozi, 5,704.9 for Kirundo, 8,893.3 M for Gitega and 2,145.3 for Muyinga.

PROFITABILITY OF OPERATIONS

The adverse politico-economic environment coupled with the extended freeze of external financing has badly affect the Bank profitability.

Thus, the sharp increase of customer financial intermediation products was counterbalanced by the decline of products and commissions on operations with the outside world. As a result, the fiscal year ended with 1,121.0 M of consolidated benefits, i.e. a 208.8 M reduction as compared to the previous fiscal year.

These achievements are nevertheless satisfactory and indicate a successful control of credit risks and overheads.