Jun 2004 Financial News

First Caribbean six-month profit up 23%

Jun 23, 2004

First Caribbean International Bank posted net profit of $192.1 million for the six-month period that ended April 30, 2004, a 23 per cent improvement over the performance of the comparative period the previous year - when the bank made $156.3 million.

The profit was made from income of $1.46 billion of which the bulk, or $1.2 billion was from interest earned on loans and government paper.

The overall income from which the net profit was earned during the period under review was some $100 million more than the $1.33 billion that the bank pulled in during the comparative period the previous year.

A major factor behind the improved profitability was the success of the bank in dragging down interest rates paid to its depositors, while yielding more from its assets with its refocus on lending.

The bank's chairman, Michael Mansoor, in a note to shareholders, in part attributed the $200-million increase in interest income (from $1 billion to $1.2 billion) to "greater loan volumes following two successful loan and mortgage campaigns".

At April 30, 2004, First Caribbean had a loan portfolio of $7.8 billion, up from $6.4 billion a year earlier and $7 billion six months before. At the same time, its cash resources and government securities remained flat at $10 billion over the six-month period.

However, against the background of the general reduction in interest rates, the bank was able to shave $37 million from its deposit cost (from $455.3 million to $417.8 million). The result is that net interest income surged from $555 million to $793 million.

But the profit growth during the six-month review period was stymied by the reduction in the bank's non-interest revenue from $327.4 million to $255.1 million.

Additionally, non-interest expenses climbed by $100 million - from $673 million to $773 million.

Net profit during the review period translated into return on equity of 17 per cent, a percentage point lower than the outturn of the comparative period the previous year.
At April 30, 2004, total assets stood at $20.5 billion, $2.5 billion or 13.8 per cent above the assets as at April 30, 2003.

The bank's chairman, in his shareholder notification, stressed that the entire profit earned during the six months would go towards augmenting the capital base of the institution, rather than making any dividend payment. The decision, he said, would be reviewed at year-end, based on the capital of the bank at that time.

Mansoor also noted that First Caribbean had completed its integration across the region, "which will now allow us to launch new sales channels and deliver significantly improved service to our customers".

Source: http://www.jamaicaobserver.com/magazines/Business/html/20040615T220000-0500_61276_OBS_FIRST_CARIBBEAN_SIX_MONTH_PROFIT_UP____.asp