The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Royal Bank of Canada’s (RBC) BISX-listed mortgage arm narrowly beat prior year comparatives with $40m in profits for the year to end-October 2022 following recovery of more than $16m in credit loss provisions.

Finance Corporation of The Bahamas (FINCO), unveiling its full-year financial statements, disclosed a 2.2 percent year-over-year net income increase that was driven by the further “release” of credit losses on loans following the Bahamian economy’s continued recovery from COVID-19 and rebound in employment levels.

Profits rose by less than $1m, increasing to $40.095m as opposed to $39.236m for 2021, but in common with other Bahamian commercial banks it was not driven by top-line interest income growth or loan book expansion. Interest income fell by almost $1.8m year-over-year, dropping from $42.346m to $40.558m for the 12 months to end-October 2022.

With interest expense down due to lower deposit rates, FINCO’s net interest income fell by 3.2 percent to $34.788m compared to $35.93m the prior year - a fall of just over $1m. Total revenue was off 3.4 percent year-over-year, standing at $36.465m as opposed to $37.755m.

However, non-interest expenses such as staff and administrative costs fell by more than $700,000 year-over-year to $13.283m. And the “release” of credit losses on loans rose to $16.216m compared to $15.698m the year before. The improvement in these two lines items was largely responsible for driving FINCO’s modest bottom line improvement.

FINCO’s financials also show it has repossessed some $140.45m in real estate assets that were pledged as security or collateral for delinquent loans. This represents a 30.4 percent jump on the prior year’s $107.669m, and is broken down into $126.905m worth of property and $13.544m in land.

RBC’s mortgage lender unveiled its results just after CIBC FirstCaribbean International Bank (Bahamas) 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.

The fellow Canadian bank, 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.

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.”