-
Share This:
-
Rate this article:
Weather
Mostly Cloudy
Max: 86°F | Min: 76°F
| BOB boosts loan loss provision by $4.4M |
|
Jeffrey Todd
Guardian Business Editor jeffrey@nasguard.com
Published: Jul 17, 2012
Bank of The Bahamas (BOB) is setting aside $4.4 million of new operating profits to loan loss reserves, an indication that the economic climate is still perceived as hostile for the local institution. In the bank's third quarter report, year-to-date net income came in at $2.8 million, with total assets amounting to $848 million. BOB’s decision to take such a hefty loan loss provision resulted in a $389,000 loss for the third quarter, ending March 31. Paul McWeeney, managing director at BOB, said $500,000 of the $4.4 million will go towards a "credit portfolio assessment" driven by the country's high unemployment rate. He told Guardian Business that BOB is concerned "that the economy is not getting any better". "In order to protect the balance sheet from this likelihood, it is best to put it aside. I think it's important we do what is prudent," McWeeney explained. The $4.4 million in provisions can be returned to the books if unused, he pointed out. The third quarter report revealed that the risk weighted capital ratio stands at 22.3 percent. percent. Net interest income of $26.8 million rose slightly year-over-year, and there was little change in income from fees and commissions, according to the bank. McWeeney expects profits for the financial year end will advance beyond $2.8 million, although he couldn't provide any specifics at this time. Year end, he said, will provide the right amount of time to complete the calibration process. BOB should also begin to see more benefits from alternative, non-interest based streams of revenue. Back in February, McWeeney announced to Guardian Business that the local institution is targeting a 50 percent spike in non-interest revenue over the next five years. Nearly $4 million will be invested in automated banking machines (ABMs) and other electronic services during this period. The modern ABMs are being rolled out across the country, offering a greater breadth of services. Meanwhile, BOB is also coming off the launch of its e-commerce program. The highly-anticipated platform, a first for a local institution, is now offering full online support for merchants to conduct business online. Bank executives have reported a strong interest from entrepreneurs and government officials. "All of these elements bode well in creating a viable and improved revenue source," McWeeney said. He also highlighted the bank's pursuit of private label credit cards with offshore banks. "While the additional loan loss provisions are expected for the remainder of the fiscal year, it is anticipated that profits will advance during the final quarter," he added. "By that time, the bank will have substantially completed its strategy, deliberately designed to recalibrate its financial structure to better operate within the 'new norm' of the general economic arena." BOB was recently selected as "Best Bank in the Country" for the fifth time since 2006, according to Euromoney magazine. |
|
|
