FCIB from consolidation to expansion

Years of adjustment, heavy loan loss provisioning, contraction and now consolidation at FirstCaribbean International Bank have started to bear fruit and is now leading to expansion. The bank that sprawls over the Caribbean has suffered with the declines in economic activities within the region that saw it writing off large amounts of loans that went bad.
The struggles to overcome the drag that the economic pressures placed on the bank that is a subsidiary of the Canadian Imperial Bank of Commerce has been tough and can be seen in in the performance of loans and assets. At April 2009, loans which stood at US$6.9 billion and assets of $10.6 billion, slipped to just $6 billion and $10.9 billion, respectively by July this year.
“We have just recently announced that the Rendezvous Branch in Barbados will be converted into a sales centre catering to Platinum Banking, Business Banking, Corporate and International Banking customers. We have opened new branches across the region, most notably the Santa Cruz mini-branch in Jamaica. Another branch at Fairview in the Montego Bay area is under construction. Additionally, we recently opened a Representative Office in Aruba and have plans to open a full service branch in 2016, as part of our expansion plan for the Dutch Caribbean,” Rik Parkhill, Chief Executive Officer of the bank stated in a report to shareholders.
The Bank enjoyed improving net profit of US$34 million in the third quarter, up $11 million or 49 percent over the prior year’s third quarter profit of $22.9 million. For the nine months, net profit attributable to shareholders was $85 million. In 2014 the bank reported a loss of $173 million after taking a one off hit of $116 million for Impairment of intangible assets.
Total revenue during the third quarter and the nine month period declined moderately compared to 2014 primarily due to lower interest earnings from loans and securities.
Operating expenses over the nine month period were down by $3 million and for the quarter $1 million compared with the same periods last year. Loan loss impairment expense was of $7 million in the third quarter and $35 for the year to date, were sharply down, on the $23 million and $193 million for the nine months in 2014 respectively. Results have been converted to US$ at an exchange rate of US$1 to BDS$2.
“ Some countries continue to experience low credit demand, additionally interest margins on loans and securities yields were lower. While productive loans balances are down 1 percent over the prior year, an improved performance over the second quarter of 2015 was recorded with 1 percent or $80.6 million in loan growth as a larger proportion of the sales pipeline was converted into productive loans during the latter half of this quarter. Additionally, non-productive loan balances were down 18 percent to $651 million compared with the same period last year as efforts continue to further strengthen the quality of our loan portfolio,” the bank reported.
The turnaround why commendable, the bank needs to find means of growing its loan portfolio and a reasonable pace again in order to generate attractive profits increases going forward for the stock to be an attractive buy.
FirstCaribbean is listed on the Barbados and Trinidad and Tobago stock exchanges and were last traded at TT$5 and Bds $1.89.