The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Commonwealth Bank is targeting a 2013 “revamp” for its Internet banking service that saw an 11 per cent activity increase in 2011, its president yesterday expressing optimism that it could also “sneak” market share growth.

Ian Jennings told Tribune Business that with the Bahamian credit market remaining flat, “the only way to grow is by taking market share”.

Commonwealth Bank’s annual report described the BISX-listed institution as ‘the leader in personal (consumer) lending’ with a 38 per cent share, despite its total loan portfolio in this segment dropping by $29.6 million, or 3.7 per cent, year-over-year to $763 million at year-end 2012.

“Our major market is contracting,” Mr Jennings added. “We had some reductions in receivables last year, but the percentage share has not changed. We think we can sneak a few points.

“Even though the market is not growing, even a 1/10th of a point is a significant amount of money on your assets.”

Elsewhere, Mr Jennings said Commonwealth Bank was looking to expand its “remote channels” for delivering services to clients, with its Internet banking service a key plank in this strategy.

Commonwealth Bank said in its annual report: “CB Online, our Internet banking service, continued to increase its customer base and activity in 2012. [These] grew 18 per cent and 11 per cent, respectively, over 2011.

“This product forms a natural part of the expanded portfolio of advanced technology-based products which is being demanded by the marketplace. Further development of this product will be made in 2013. The bank is actively looking at new delivery channels for our customers in 2013.”

Commonwealth Bank saw its 2012 net income fall by 30.52 per cent to $36 million, compared to $51.8 million in 2011. This resulted from a 79 per cent increase in loan loss impairments to $44 million - a rise of around $20 million.

Mr Jennings told Tribune Business yesterday that Commonwealth Bank had seen “some improvement” in its results during the 2013 first quarter.

Asked whether the 2013 full-year bottom line performance was likely to turn out better than last year, he added: “From where we are at the moment, I think so. Nit significantly, maybe, but better.”

Mr Jennings conceded that while Commonwealth Bank had expected a deterioration in net income compared to 2011, management had not anticipated the size of the fall-off.

“From the mid-year we could see what was going to happen,” he added. “We started off 2012 with an anticipation that it would be down from 2011, but not down so much.”

Other indicators were more encouraging. Writing in the bank’s annual report, Mr Jennings said: “Performance as measured by Return on Equity (ROE) and Return on Assets (ROA) were also reflective of reduced profitability, but continued to respectable at 16.6 per cent and 2.1 per cent, respectively.

“Liquidity ratios remain strong, and with a Liquid Asset Ratio (LAR) in excess of 168 per cent, a regulatory defined ratio, and an actual liquidity ratio in excess of 33 per cent, both of these ratios well exceed regulatory minimums and internal objectives.

“The bank’s efficiency ratio, which takes into consideration non-interest expenses compared to revenue generation, actually improved in 2012 to 40.2 per cent and exceeded plan expectations.

“The efficiency ratio, which is an important interbank measurement tool, reflects a strong balance between revenue generation and the bank’s own expense mitigation process. These operating ratios continue to be well above industry norms.”

Commonwealth Bank added that it aimed to retain an efficiency ratio of less than 50 per cent in 2013.