The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A BISX-listed bank has blamed a combination of inflationary pressures and $22m year-over-year increase in loan loss provisions for a near-15 percent decline in its 2022 full-year profitability.

CIBC FirstCaribbean International Bank (Bahamas), in its annual report for the year to end-October 2022, said inflation helped produce a $5m increase in operating expenses compared to 2021 along with higher expenses related to “strategic business and infrastructure investments”.

And, while it had enjoyed the “partial release” of COVID-19 related loan loss provisions in its 2021 financial year, the commercial lender said changed modelling and “credit migration” forced it to incur a $22m charge in the 12 months to end-October 2022. This offset a $3m increase in net interest income, driven by higher US interest rates and securities portfolio growth, and an $11m operating rise due to foreign exchange and other fee-based activities.

Jacqui Band, CIBC FirstCaribbean International Bank (Bahamas) managing director, told shareholders: “For the year ended October 31, 2022, the bank reported net income of $70.2m, a decrease of $12m or 15 percent from prior year’s net income of $82.2m.”

Turning to initiatives launched during the year, she said these had largely focused on customer service and digitisation. “Early in the fiscal year we launched the Client Resolution Centre, a self-service online portal that allows clients to lodge complaints or compliments and have these addressed through a structured process with executive oversight,” Ms Band said.

“Further, the system gives us a data set for analysis and to observe trends. We can quickly put our finger on a systemic issue and drive resolution. With our digital transformation well underway and much of our core digital infrastructure in place, our focus is shifting to continuous improvement and growth. During the year, the Bank deployed an additional 14 Smart ABMs across The Bahamas and Turks & Caicos that count currency notes and give instant value for cash deposits.

“We introduced QR codes to mobile banking, which facilitate quick and easy person-to-person payments. For corporate online, we made enhancements to improve administration, bill presentment and cheque image display among general user experience and performance enhancements.

“Toward the end of the fiscal year, we introduced our Digital Loan Store, an automated platform that allows borrowers to complete an online loan application and, once approved, receive the funds in less than 15 minutes.”

Breaking down its performance into segments, CIBC FirstCaribbean said revenues in its retail and business banking division increased from $88m to $101m year-over-year in 2022. However, net income dropped by $7m or 21.9 percent, dropping from $32m in 2021 to $25m.

“Total revenues increased year-on-year by $13m or 15 percent primarily due to lower fund transfer pricing (FTP) cost on loans and higher foreign exchange earnings, deposit services and cards services income, partially offset by lower performing loans income. Net income decreased year-on-year by $7m driven by higher provision for credit losses, net of the higher revenues,” the bank said.

Moving to its corporate and investment banking niche, while revenues rose year-over-year from $82m to $88m, profits were relatively flat - rising by only $1m to $54m. “Total revenues increased year-on-year by $6m or 7 percent primarily due to higher deposit, credit and card services fee income and higher foreign exchange earnings,” CIBC FirstCaribbean International Bank (Bahamas) said.

“Net income increased $1m year-on-year due to the higher revenues partially offset by higher internal expense allocations and a smaller net credit loss expense release.” On the wealth management side, revenues rose from $10m to $13m, and losses fell by 60 percent year-over-year - reducing from $5m to $2m.

“Total revenues increased year-on-year by $3m or 33 percent as a result of higher FTP earnings on deposits due to the higher interest rate environment and higher foreign exchange earnings,” CIBC FirstCaribbean International Bank (Bahamas) said. “Net loss declined $3m year-on-year primarily due to as the higher FTP earnings.”