FCIB Jamaica profit falls to six-year low

It took $768 million more to run the affairs of FirstCaribbean International Bank Jamaica this year, resulting in drastic reductions at the bottom line where profit contracted by close to two-thirds.

At year-end October 2010, FirstCaribbean Jamaica reported $359 million in profit, compared to $887 million in the year prior, a near 60 per cent drop.

The No. 4 bank's $1.35 per share profit this year puts an end to a six-year growth streak. It last reported comparable profits - $381 million - in 2004.

Three things produced the current outcome: around four per cent reduction in total revenue to $4.2 billion - net interest income was flat, while other income fell; loan losses of $298 million,though substantially better than last year's $449 million of impairments; and a near 30 per cent hike in operating expenses, which rose from $2.6 billion to $3.4 billion.

FirstCaribbean Jamaica chairman Michael Mansoor said the increased costs were "mainly due to the bank's share of head office support costs, occupancy, and depreciation."

FirstCaribbean Jamaica - which went through a leadership transition this year when Nigel Holness was promoted to replace retired Clovis Metcalfe - operates from the high-rent business district of New Kingston.

Chairman's review

Mansoor also said in the chairman's review of the bank's performance, appended to the year-end accounts, that the $204-million decline in non-interest income was "primarily due to lower gain from sales of investment securities and hedge accounting".

The depressed gains from investment securities is industrywide, affecting banks, brokerages, and insurance companies as a result of falling bond prices and falling interest rates.

On the upside, the bank said its loan-loss ratio is now at 1.0 per cent, down from 1.3 per cent, and its capital base has strengthened from $7.3 billion to $7.6 billion.

Its loan portfolio, however, has lost $3 billion of value and now stands at $31 billion.

business@gleanerjm.com