Dec 2008 Financial News

FirstCaribbean revenue, profit diminished

Dec 12, 2008

FirstCaribbean Inter-national Bank Limited (FCIB) is expected to report year-end profits that have fallen off by US$80 million or 31 per cent when its earnings report becomes available.

But the Barbados-based bank is also expected to report that its performance is not as bad as it seems at first blush, given that US$52.4 million of profits in 2007 was due to a one-off gain from Visa's worldwide restructuring. Still, even when that gain is discounted, 2008 still represents a decline in net profit for the group, whose branches span some 17 markets, by just under 14 per cent.FirstCaribbean says, too, that it subsequently made a loss of US$3.5 million on the 2008 sale of its Visa shares.

The sale of the shares in the third quarter netted the bank US$4.3 million. The bank in an early stock market filing of skeletal unaudited figures - done ahead of schedule to facilitate its parent, Canadian Imperial Bank of Commerce whose results are filed earlier - said profit for the year ending October 31, 2008, was about US$175.3 million compared to $255.7 million last year. Said chairman Michael Mansoor: "The 2008 results have been affected by tightening conditions in the global and regional economies and are in line with management expectations."

New executive council
FirstCaribbean has signalled to the market, however, that it recognises that it cannot be business as usual. Announcing that its intent was to become even more customer-driven, the bank in November named a new executive council, a senior team of top executives some with new portfolio responsibilities. Jamaica's Milton Brady, for example, is now managing director of the Corporate Investment Bank to be stationed in Barbados. He continues to oversee the country operations in Jamaica until a replacement is found for him.

Additionally, the finalisation of the 'risk-sharing' deal with the Inter-American Development Bank, which will provide a US$200 million credit facility in support of a US$400 million programme, will give FirstCaribbean the liquidity to build up its corporate loan market through long term loans at a time when credit is tight and banks generally are reluctant to lend. The loans are targeted for infrastructure development, tourism and mid-size businesses.

"This partnership allows us to leverage our financial strength to help our clients who are themselves focused on growing their businesses," said Brady in a statement. There were early indications, even before the global financial crisis emerged in the twilight of summer at the collapse of Lehman Brothers, that the bank's performance would not match up to last year's. At the end of July, while third quarter profit rose by almost US$24 million to US$66 million, nine-month profits were off by 12 per cent, and revenue down by four per cent. Loan loss expenses nearly doubled in the nine-month period to US$21.3 million, compared to $11.6 million in year prior period, and eclipsed the US$17 million for the annual period in 2007.

Its assets, relative to the last audited balance sheet, dated October 2007, were diminished by more than US$300 million to US$11.5 billion. The July balance sheet reflected a half a billion gain on the loan portfolio, but the value of investments were down by more than US$300 million, while value of financial assets dived from US$1.1 billion to US$551 million. The bank ended the 2008 year with revenue of US$550.5 million, which when compared to the US$606 million reported a year ago, had diminished by nine per cent.



Source:
The Jamaica Gleaner
Friday December 12, 2008
http://www.jamaica-gleaner.com/gleaner/20081212/business/business4.html