Jun 2011 Financial News

FirstCaribbean Ja's Q2 net profit drops 37%

Jun 15, 2011

FirstCaribbean International Bank's Jamaican operations — FCIBJ — posted a 37 per cent decline in net profit for the three months ended April 30, 2011 (its second quarter), when compared to the corresponding period in 2010.

However, the The $108.6 million net profit posted during the bank's second quarter (Q2) reflected continued improvement to quarterly profits since the bottom line plunged into the red in the end-October quarter of last year.

FCIBJ's net income for the end-April quarter of 2010 was 30 per cent lower than year-earlier levels, although the fall off was not due to lower net interest income expected from the Government's debt exchange programme implemented in February last year — the JDX — but rather lower non-interest income (primarily due to lower mark to market gains on investment securities) and higher non-interest expenses (mainly due to higher management fees, communication, occupancy and staff costs).

The Q3 2010 profit plunged even further below year-earlier levels (98 per cent lower) due largely to loan loss impairment of $315.8 million, which was nearly three times higher than the amount incurred during hte three months to July 31, 2009, as the "credit portfolio (was) impacted by the prevailing economic conditions".

The bank made an adjustment to loan loss impairment during Q4 2010 that added $66 million back to the bottom line for that quarter but non-interest expenses jumped by 77 per cent to $1.2 billion mainly due to "the reimbursement of the bank's share of head office support costs, occupancy and depreciation charges" — the upshot being the bank posted a $19.9 million net loss for the quarter.

The following quarter loan loss impairment jumped again ($140 million up from the $16.5 million incurred during Q1 2010) but net profit was 63 per cent lower than year-earlier levels compared to the 119 per cent decline during the fourth quarter of 2010.

FCIBJ's performance during the review quarter was as a result of a 20 per cent rise in non-interest expenses (which totaled $896.6 million during the review quarter) and a more-than-doubling of loan loss impairment, which was up from $31.4 million during the three months to April 30, 2010 to $75.2 million during the review quarter.

Net interest income increased marginally from $820.3 million in the end-April quarter of 2010 to $824.7 million during the period under review, but non-interest income jumped 42 per cent over year-ealier levels to $304.1 million during the three months to April 30, 2011.

In a statement accompanying the financial statements FCIBJ's chairman, Michael Mansoor said the bank's "stockholders' equity stood at $7.8 billion as at April 30, 2011, and represented a risk-based capital ratio of 23 per cent, which exceeds the minimum requirement of 10 per cent stipulated by the Bank of Jamaica". "This allows the Bank to be positioned to take advantage of future opportunities," he said, adding that the "board, management and staff will continue to monitor the economic conditions and take the necessary steps to ensure that the interests of all our stakeholders are promoted in these circumstances".

Earnings per share for the quarter was 40.9 cents per ordinary stock, which brings the banks last-twelve-month EPS to 63 cents per share.

FCIBJ's share price remained unchanged at $13.20 at the end of yesterday's trading on the Jamaica Stock Exchange (JSE) yesterday, as no selling or buying of the stock took place, which has been the case since it last traded on April 7, 2011.


Source:
Jamaica Observer
Wednesday June 15, 2011

http://www.jamaicaobserver.com/business/FirstCaribbean-Ja-s-Q2-net-profit-drops-37-_9011514#ixzz1PM8L9syj