The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bank of The Bahamas should have waited to pay a more substantial dividend than its recent one cent per share declaration after a 49.6 percent jump in profits, an investor argued yesterday.

Mike Lightbourn, Coldwell Banker Lightbourn Realty’s president, who is one of the minority shareholders own a collective 17.4 percent interest in the BISX-listed institution, told Tribune Business he was cautiously optimistic that better days lie ahead after total comprehensive income rose by just under $1.4m year-over-year for the three months to end-September 2023.

The bank, which endured two taxpayer funded bail-outs in 2014 and 2017 to rescue its toxic commercial loan portfolio, felt confident enough to declare a one cent per share dividend on October 16, 2023, due to its slowly improving financial performance.

However, Mr Lightbourn said he would have preferred Bank of The Bahamas’ Board to delay and declare a more substantial return to investors in the coming months. “When I saw that I thought why can’t they wait and next time give us two cents per share? I think it would have made sense to wait,” he told this newspaper.

“It would be a little more encouraging for shareholders. I’m hopeful of better things. I think most shareholders will think they’ve done well now the shares are worth something.” Bank of The Bahamas share price on the Bahamas International Securities Exchange (BISX) closed at $5.30 yesterday, although there has been no trading in the stock since August 14, 2023 - three months ago.

Of the nine outstanding orders placed by investors for Bank of The Bahamas shares, only one represents a ‘buy’ with the others all representing retail shareholders wanting to sell and exit. All prices being sought are in the $5.20 to $5.30 range.

A closer inspection of Bank of The Bahamas’ results, however, that its 2024 first quarter comprehensive income would have come in lower than the prior year without the benefit of a positive $1.734m swing on loan loss impairment reversals. The BISX-listed institution enjoyed a $389,413 writeback of provisions this year compared to the $1.345m worth of charges it took in the three months to end-September 2022.

As a result, total comprehensive income rose to $4.101m this financial year as opposed to $2.742m for the 2023 first quarter. Net interest income rose by close to $1.3m, jumping to $10.901m for the 2024 first quarter as opposed to $9.626m in the comparative period, while fee and commission income rose to $2.915m from $2.49m.

Adding in $1.335m in other operating income took total operating income to $15.152m, a 15.2 percent year-over-year increase over the prior year’s $13.155m. However, this was exceeded by the 23.2 percent hike in operating expenses, which hit $11.44m compared to the year-before $9.285m.

Bank of The Bahamas’ non-accrual loans, representing credit 90 days or more past due, remains significantly higher than the commercial banking industry’s at 17.1 percent of the net $363.162m loan portfolio even if it no longer has to rely on the $167.437m government bond injected into its balance sheet to keep it solvent.

Neil Strachan, Bank of The Bahamas managing director, in his first quarter report to shareholders, said: “The bank’s total operating income grew by $2m compared to the same period in the previous year. This improved performance is attributed to higher interest income derived from the bank’s loan growth, and investment of its excess liquidity.

“Furthermore, the bank’s non-interest revenue contributed to the overall positive variance as the bank recorded higher income from fees and commissions, merchant services and prepaid cards. This first quarter financial performance was also positively impacted by the net impairment reversal of $0.4m compared to a net impairment loss of $1.3m for the same period in prior year.

“Net impairment reversal is attributed to the note receivable balance where the bank adjusted its provisions assumptions based on the interest payments performance, the economy and its related positive indicators,” he added.

“Operating expenses increased by $2.2m mostly due to employee and occupancy expenses, other administrative costs, banking and business licenses and depreciation expenses. Regulatory and statutory license fees increased along with additional building insurance and administrative expenses. The bank continues to invest in its technology and physical premises to better serve our customers.”