The Tribune

By NEIL HARTNELL 

Tribune Business Editor 

nhartnell@tribunemedia.net

A BISX-listed bank yesterday said it is leaving “no stone unturned” after disclosing that its six-month profits are near-perfectly on pace to hit 2024’s full-year target of $18m.

Gowon Bowe, Fidelity Bank (Bahamas) chief executive, told Tribune Business the lender’s $8.978m half-year net income is spot-on the trend required to achieve its profit projections with fee and commission earnings alone forecast to exceed the 2023 full-year by 20 percent or more.

Affirming that the retail bank is benefiting from pursuing “things taken for granted”, such as recovering $90m in previously written-off consumer loans, he responded to concerns that Fidelity Bank (Bahamas) and himself have too high a profile by asserting that the Bahamian capital markets are generally “found wanting” when it comes to shareholder disclosures and transparency.

Speaking after the bank’s recent annual general meeting (AGM), Mr Bowe told this newspaper that the overall credit market “flattened out” during the 2024 first half with loan portfolio growth “a bit more accelerated” than during the same period in 2023.

He added that Fidelity Bank (Bahamas), and the wider commercial banking industry, were benefiting from the continued evolution of this nation’s first-ever credit bureau as its reports on the creditworthiness of potential borrowers are forcing many to settle past outstanding loan debts with other institutions.

Disclosing that the credit bureau’s reports have been employed for 35 percent of loans disbursed by Fidelity Bank (Bahamas) during 2024 to-date, a more than four-fold increase from the 8 percent recorded just two years ago, Mr Bowe again urged the Government and private sector to work together to resolve “the overhang” of distressed mortgaged properties from the 200-2009 recession rather than build new homes.

“We are, and not to be sort of superior, but we are literally on the $9m mark, which is the half-way mark to our annual target of $18m,” he told Tribune Business of the bank’s half-year profit performance. “The exact number was $8.978m.

“When we look at the contributing factors they are very consistent with the first quarter. The exercise in pursuing written-off debt has continued to benefit profitability. We have seen net interest income stabilise itself, so the loan portfolio remained stable.

“The fee and commission income has remained consistent with the growth from the first quarter, which means there will be at least a 20 percent growth over the prior year and it’s likely to be more. The [merchant] card business, as it comes on board, it’s like annuity income.”

Alfred Stewart, Fidelity Bank (Bahamas) chairman, writing in its just-released 2023 annual report conceded that last year’s financial performance was “well below the expectations of shareholders of the bank given the levels of profitability and returns that has become the norm”.

While net and total comprehensive income equalled $13.8m, and the return on shareholder equity some 13.65 percent, Mr Stewart added that the results “triggered assessments of the business models, including products and services, information expectations”. He said “these resets are being executed effectively” based on the 2024 first-half results.

Mr Bowe yesterday confirmed Fidelity Bank (Bahamas) strategy to focus on small and medium-sized businesses plus Family Island second homeowners, with Eleuthera confirmed as the second location for its agency banking-type model that allows consumers to conduct electronic transactions via a kiosk while a third-party provider handles cash.

“There are multiple elements we are working on simultaneously to ensure revenue stay stable and, given that the loan market rebound will likely take some time, maintain profits,” he added. “There are a lot of unturned stones we are turning over, existing products for new markets and some things we’ve taken for granted.

“The debt written-off and not pursued is certainly an area of profit as each one recovered goes to the bottom line, while loan restructuring goes to loan growth.” As for fees and commission income, which Mr Bowe told shareholders in the annual report account for less than 15 percent of total income, the bank is seeking to grow these by introducing “value-added services”.

“If the first half is any indication we’ve seen some flattening of the lending market, which means we’re not seeing contraction, and growth is a bit more accelerated than it was last year when it was $23m across the sector,” the Fidelity chief told Tribune Business. 

“We’re seeing improvements, and people seeking financing with other institutions and told they have debts with us because of the credit bureau reporting. It’s good. It means that people are comfortable enough to start borrowing, and not able to shed their legacy obligations. The credit bureau reporting means all persons have to regularise their outstanding situations.”

Mr Bowe revealed that loan disbursements using a credit bureau report had increased from 8 percent of the total in 2022 to 20 percent a year later and, then, to 35 percent for 2024 to-date. This marked a four-fold increase in percentage terms in just two years.

“We’re using the credit bureau reporting more often,” he added. “More of those loan disbursements have elements of the credit bureau and credit reporting factored in. What it means now is that persons appreciate they simply cannot pretend not to know the debts they have.”

Mr Bowe, though, said the Government was “unwisely and naively” continuing to build new homes rather than working with the banks and other lenders to first liquidate the remaining portfolio of distressed mortgage properties from the 2008-2009 recession. 

“You look, for example, at the mortgage malaise and we have so much distressed inventory, and the Government - unwisely and naively - continues to build new inventory without sucking up the inventory overhang we have,” he added.

“The IMF, in its financial sector assessment programme, said the reality is that The Bahamas has not yet brought itself out of the overhang of the 2008-2009 great recession as we have so many distressed properties. In the event we have a similar event to 2008-2009, we will not fare as well because we have the distressed property situation.

“While they are building more housing, and making commentary that there is not enough housing, there is a tremendous amount of housing in the distressed overhang.” Mr Bowe also made no apologies for the bank’s visible public profile.

“I took the position ever since I joined that I speak candidly and directly,” he added. “The Bahamian capital markets are still found wanting in terms of disclosure by comparison to the US, Europe and Asia. We’ve become accustomed to communicating.”