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BOB shrugs off $6m default to resume profits

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bank of The Bahamas shrugged off a $6m default judgment bid by an ex-Cabinet minister’s companies, and resumed its slow recovery march, by posting $2.99m in 2019 full-year profits.

The BISX-listed institution, which has twice had to be rescued by multi-million dollar taxpayer bail-outs, last night unveiled an 87 percent net income increase for the 12 months to end-June that was driven largely by a six-fold reduction in bad loan provisions.

These dropped from $7.568m to $1.184m year-over-year, a more than $6m reduction, as Bank of The Bahamas’ recovered much of the ground lost in the third quarter to the claim made against it by the family companies of Damian Gomez, ex-minister of state for legal affairs, and David Jennette.

Bank of The Bahamas’ need to take provisions against any potential loss stemming from that default judgment plunged the institution into a $4.039m net loss for the three months to end-March 2019. This “red ink”, which wiped out first-half profits worth more than $3.5m, drove Bank of The Bahamas into a $209,604 loss for the first nine months.

The bank, though, was able to recover much of this lost ground by a six-fold year-over-year increase in net income for the fourth quarter, which rose from $524,397 in 2018 to $3.2m this time around.

Kenrick Braithwaite, Bank of The Bahamas’ managing director, in his message to shareholders reassured that there was no need for panic over the default claim against it.

“For the year ended June 30, 2019, the bank recorded net income of $3m compared to the $1.6m net income for the year ended June 30, 2018, an increase of 87.1 percent,” he said. “During the last quarter, the bank was made aware of a judgment in default against the bank for approximately $6m plus interest and cost.

“The bank has filed the applications to set aside the default judgment and the said damages, and also to stay or, in certain circumstances, strike out enforcement proceedings. Adequate provision has been made in the financial statements for any loss that might ultimately be determined.”

These default judgment provisions resulted in a near-23 percent increase in Bank of The Bahamas’ full-year operating expenses, which jumped by almost $7m from $29.686m in 2018 to $36.505m this time around.

“The bank’s operating expenses were relatively stable for the quarter but had an increase of $6.8m or 22.97 percent for the year, primarily due to the legal claim mentioned,” Mr Braithwaite added. “Excluding the legal claim, the bank’s operating expenses were substantially unchanged year-over-year.”

With total operating income up by $1.8m, or 4.7 percent, for the full-year at $40.679m, Bank of The Bahamas had to rely on the reduction in bad credit provisions to offset the impact of the contingencies taken for the default judgment.

More than one-quarter of Bank of The Bahamas’ $341.233m net loan portfolio remains in the non-accrual category, meaning it is 90 days or more past due. While this ratio actually fell year-over-year from 28.92 percent to 26.22 percent, it is still the worst among all Bahamas-based commercial banks by far.

And the bank’s balance sheet shows that it would be technically insolvent, with liabilities exceeding assets by around $9m, without the $167.627m worth of government bonds injected into the institution by the second bail-out in August 2018.

Despite its improved profitability, Bank of The Bahamas has a long way to go to wipe out the $139.751m accumulated deficit on its books that represents the heavy losses which necessitated the taxpayer bail-out.

Comments

DDK 5 years, 4 months ago

Bunch of pure unadulterated shite!

killemwitdakno 5 years, 4 months ago

I guess Tribune is no longer capitalizing acronyms.

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