The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Some 65 percent of Bahamas-based international banks have suffered “little or no financial impact” from COVID-19, the Central Bank revealed yesterday, marking the sector as one of the few to emerge relatively unscathed to-date.

The regulator, unveiling a survey of 71 licensees, said some 47 respondents said they had sustained minimal if any impact from the pandemic and the Bahamian economy’s near-three month lockdown. But, while the fall-out had been “manageable”, the Central Bank said the industry continued to face ongoing uncertainty amid the global struggle to combat the virus.

“In response to the question on assets growth/structure, provisioning or profitability, 47 supervised financial institutions (SFIs) (65 percent) responded that the pandemic has had little or no financial impact,” the Central Bank reported.

“For the minority of respondents reporting an impact, eight SFIs (11 percent) cited concerns with loan loss provisioning or asset devaluation, while 16 SFIs (24 percent) expressed concerns with revenue (fee/interest income) or growth potential. One SFI reported concerns with both.”

The regulator added: “The COVID pandemic’s impacts on internationally active SFIs have so far proven manageable. Many respondents, however, noted the unknown nature of emerging risks, especially market risk (chiefly interest rate risk).

“In some cases, movements had an offsetting impact (one revenue stream increases while another revenue stream decreases - for example, increased transaction fee revenue versus decreased interest income.”

All 72 Bahamas-based bank and trust companies who responded to the Central Bank’s survey confirmed that their overseas parent groups were able to provide them with liquidity support should it become necessary.

“When asked ‘what are the key economic/business challenges faced by your institution arising from the COVID-19 pandemic’, 21 SFIs (29 percent) responded that there was little or no impact. Of those indicating a more than insignificant impact, 17 SFIs (24 percent) cited business continuity concerns or remote working challenges,” the Central Bank said.

“One SFI reported challenges from travel restrictions or the inability to onboard clients. Fourteen SFIs (19 percent) expressed concerns over market volatility or economic downturn fears. Nineteen SFIs (26 percent) indicated a combination of two or more of the above-noted impacts.”

Focusing the survey on business continuity challenges, the Central Bank added: “Responses included the use of laptops/tablets, and use of employee home computers to access private networks. Respondents also noted challenges with local utility dependability [Bahamas Power & Light], which decreased productivity of some work at home staff.

“In some cases, these steps were rolled out as a part of a pre-existing business continuity plan. Other SFIs had to adopt quickly, without an existing plan. With regard to group structures, respondents described challenges experienced by parent entities similar to those of the subsidiary entities, mostly related to environmental, economic and market concerns.

“SFIs with Brazilian parents conveyed more turmoil than for any other geographic area.”

Satisfied with the results, the Central Bank added: “The results from the survey are reassuring. All institutions have been able to maintain effective operations in the new environment, and to-date financial impacts have been minimal.

“Some institutions relied on their pre-existing business continuity plans, and others needed to rapidly create new measures to address the combination of curfews, work from home, and the need to maintain in-office staff for procedures such as wire transfers.

“The Central Bank is satisfied that its internationally active licensees are operating soundly in the pandemic environment, and that they can continue such operations as long as is necessary. At least at this stage, there is no indication of undue financial or operational stress arising from the pandemic.”