Jun 2004 Financial News

BNB Top Barbados Bank

Jun 23, 2004

For the fourth year in succession, commercial banks have recorded an increase in pre-tax earnings.

During the period in review, Barbados National Bank (BNB) changed its accounting period to September 30, instead of December 31, hence results of this institution are not reflective of a full year’s operation.

Based on actual performance, pre-tax earnings for commercial banks reached $120.9 million, just $80 000 short of last year’s result. However, when BNB’s unaudited pre-tax earnings of $10.6 million for the last quarter of year 2003 are taken into consideration, the overall picture reflects total pre-tax earnings of $131 million or eight per cent above the previous year’s performance.

For BNB, the year 2003 was an exceptional one. Net interest income increased by 51 per cent over the corresponding period for the year 2002, while pre-tax earnings rose to $32.9 million from $27.6 million – in the process bettering Royal Bank of Canada’s (RBC) reduced earnings of $31.6 million.

Perhaps the greatest feature of BNB’s performance is the growth of its assets. For the accounting period ending September 30, 2003, assets grew to $1.514 billion from $1.259 billion over the full accounting period in year 2002.

However, during the period October 1, 2003, to December 31, 2003, the bank registered a phenomenal growth of $74 million to end the year with an asset base of $1.588 billion.

This figure is just $500 000 short of the combined asset base of the former CIBC and Barclays Bank – now operating under the umbrella of FirstCaribbean International Bank (Barbados).

Of even greater significance is the fact that unaudited financials for the period to March 31, 2004, reflect non-interest income at $15 million – a figure that has already eclipsed earnings under this head for the revised September 2003 year-end.

With this sustained level of overall growth, it will indeed be interesting to see what effect these overwhelming results will have on the local stock market in the coming months.

Apart from BNB, both FirstCaribbean and Caribbean Commercial Bank (CCB) achieved improved levels of performance.

For CCB it has been a third straight year of growth with last year’s pre-tax earnings of $6.1 million reflecting a phenomenal growth of 177 per cent over its 2000 platform performance of $2.2 million.

The question on the lips of many observers is how will CCB perform now that its leader of several years has taken a position with a competitor bank literally just yards away.

For FirstCaribbean, year 2003 was virtually the first full year of reckoning following its $16.6 million loss sustained in the reconstruction process.

However, the meteoric growth in asset base of BNB and the expansionist policy of Republic Bank could well lead to testing times in the local banking industry.

On the down side, three banks failed to match their performances in the previous year. RBC was short by $4.8 million on its 2002 pre-tax earnings of $36.4 million, while earnings of the Bank of Nova Scotia and Mutual Bank fell by $600 000 and $500 000, respectively.

In the case of RBC, there was a substantial increase in provision for credit losses. These provisions increased to $1.170 million from $761 249 in the year previous.

Altogether, financials reported for the year 2003 indicated significant growth in bank assets. These rose to $6.727 billion from the previous year’s $6.078 billion. In addition, non-interest income increased by 39.42 per cent following a $44 million injection of revenue from FirstCaribbean.

Perhaps it is of greater significance to note that while net interest income increased by only 11 per cent, the increase of non-interest income from commercial banks almost reached 40 per cent.

In the coming months, therefore, one can expect a competitive scramble for market share as banks seek to improve their respective bottom lines.

Source: http://www.nationnews.com/StoryView.cfm?Record=50850&Section=LO