By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
Fidelity Bank (Bahamas) yesterday said its net income to end-September remained 37 per cent above 2011 comparatives, despite some mortgage borrowers defaulting in hopes of benefiting from the Government’s mortgage relief plan.
The BISX-listed commercial bank, which posted $4.35 million in comprehensive income for the first nine months of 2012 despite a 136 per cent rise in loan loss provisions to $2.7 million, subtly hinted at the ‘moral hazard’ which the Government plan has sparked in some borrowers.
Anwer Sunderji, Fidelity Bank (Bahamas) chief executive, said in a statement that previously paying mortgage borrowers sought to benefit from ‘Mortgage Relief Programme’ sponsored by the Government, by falling into arrears.
He said: “Fidelity’s operating performance continues to improve despite a difficult economy. Return on Shareholder’s Equity (ROE) for the nine months was 13.5 per cent annualised ,with Return on Assets (ROA) at 1.6 per cent.
“During the first nine months, total assets grew by 9 per cent to $381 million with loan assets growing by 13 per cent to $275 million.
“Operating efficiency, which measures the percentage of revenue used for operating expenses, improved to 59.5 per cent from 70 per cent at start of the year as revenues grew by 20 per cent and operating expenses only increased by 1.3 per cent.”
Fidelity Bank (Bahamas) added that almost 70 per cent of distressed borrowers continued to occupy their homes despite being in arrears for periods over a year.
It added that while mortgage loan arrears have seen a spike in recent months, they remain within the experience of the banking industry overall.
Fidelity Bank (Bahamas) said liquidity remained robust, with cash and investments accounting for 23 per cent of total assets.
Its loan to deposit ratio was under 92 per cent, indicating that it hads ufficient headroom to continue with growth plans despite muted credit demand.
Fidelity Bank (Bahamas) said risk capital remains strong and in excess of Central Bank requirement, and it expects net income trends to continue for the balance of the year.
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