Profit and loss performance has exceeded expectations and the balance sheet is strong with a sound capital base and high liquidity. AIB’s reputation for integrity and excellent service has been rewarded by growth in customer numbers, loans, and deposits.
From a governance perspective, policies and procedures have been strengthened throughout the Bank, especially in risk management. In response to the Kabul Bank failure, the Board’s Risk Committee has been diligent in improving the risk management framework and monitoring capabilities, especially in credit risk management. As a result, the Bank continues to experience a low level of non-performing loans, amounting to less than two percent of total loans outstanding. This positive NPL ratio is also due to the Bank’s strong relationships with creditworthy customers.
AIB shareholders have approved the expansion of the Board of Supervisors from six members to nine. All new directors will qualify as independent directors. This action will bring us in line with international best practice and Afghanistan banking regulations. In line with the expansion of the Board, the annual general meeting of shareholders in November, 2011 approved the appointment of a new independent director, subject to Central Bank formalities.
In early 2011, management developed a strategic plan to cover the period from 2011-14. This calls for an expansion in the Bank’s nationwide network by opening new branches in Kabul as well other key locations in the outlying provinces. The plan also defines new products and services to expand our existing base, and new customer acquisition initiatives focused especially on small and medium size businesses.
The driving force is our mission to be a leader in developing the real economy in Afghanistan. In 2011 management began planning new products and channels such as mobile banking, call center, payroll loans, loans against gold, and Sharia banking once regulations are issued by the Central Bank. Management has also worked to further improve customer service. Each quarter the Board receives updates of progress against the strategic plan.
A major priority for Board members is to assess the implications of the wind-down of the coalition military forces in Afghanistan after 2014.To this end, the Board, along with our shareholders, will develop responses to various scenarios the Bank may face in the future.
Another important Board responsibility is the development of a plan to ensure that key senior management positions are filled. This initiative will be driven by the Compensation Committee.
I am delighted by the shareholders’ approval in principle for the construction of a new AIB headquarters building in Kabul. Preliminary concept drawings have been developed by the architectural firm of Kann Finch and construction is planned to begin in late 2012. This decision demonstrates the commitment of our shareholders to the long-term development of Afghanistan.
One of the most important factors in the success of AIB is the dedication, integrity and widespread relationships of our shareholders. These attributes have allowed the Bank’s Board and Management to operate without interference and within the boundaries of good governance as defined by Afghanistan banking regulations and international best practice. In sum, this has provided a ‘halo’ effect for AIB in our dealings with other institutions in Afghanistan and elsewhere.
In a service industry such as banking, excellent performance is driven by the efforts of the institution’s staff. I therefore take this opportunity to acknowledge and applaud the hard work, integrity, and dedication of our employees. Their efforts have made AIB a highly respected institution. I also thank my colleagues on the Board of Supervisors and our shareholders for their continued support.
Ronald Stride
Chairman