By NEIL HARTNELL
Tribune Business Editor
Fidelity Bank (Bahamas) yesterday said its ability to “turn on a dime” gave it a competitive advantage over larger commercial banks, although it conceded it had “taken many years” to deliver 2012’s $6.4 million comprehensive income.
Speaking to Tribune Business after the BISX-listed bank delivered a 67 per cent year-over-year bottom line increase for 2012, Anwer Sunderji, its chief executive, acknowledged that its “historic results were not particularly good”.
He praised the 25 per cent minority Bahamian shareholders for “their patience”, and described total shareholder returns for 2012 as “very satisfying”.
“The shareholder returns are indeed very satisfying but it has taken us many years to get there,” Mr Sunderji told Tribune Business.
“Our historic results were not particularly good and we are grateful to our patient shareholders for staying with us and maintaining their commitment.”
He added: “We have no plans for expansion [in 2013]. The economic environment remains challenging and until we see nascent signs of recovery, it would not be prudent to expand our footprint.
“As a small institution, we maintain an opportunistic approach to business. We can turn on a dime and enter markets that may be under served.”
Adding that Fidelity Bank (Bahamas) 2012 results “met our expectations”, Mr Sunderji indicated that the institution’s improved performance had been driven at least partially by a move away from its historical roots as a traditional, conservative mortgage lender.
Mortgage loans now account for a minority share, or $125.1 million, of its $278 million loan book, and Mr Sunderji disclosed: “Roughly 45 per cent of our loan book comprises residential mortgages, with the balance in overdrafts, commercial loans, credit card receivables and consumer loans.
“Cost containment, growth in loan assets, and easing of deposit rate were all factors in the 67 per cent income growth.”
While Fidelity Bank (Bahamas) had no target for consumer loans as a percentage of its total portfolio, Mr Sunderji said: “The loan mix has changed as the economy has changed. There are fewer people who qualify for home mortgages, and banks have to explore other options to grow.
“We are optimistic about 2013, but the future is fraught with uncertainty. Our 2013 first quarter will be published shortly and will provide an indication of what lies ahead.
“The on-going improvement in the bank’s performance has been reflected in a jump in the share price of 30 per cent in the 2013 first quarter alone.”
Fidelity Bank (Bahamas) $6.4 million comprehensive income equated to$0.20 per share. Its Return on Average Equity (ROE) attributable to ordinary shareholders improved to 15 per cent from 10 per cent in 2011, while its and Return on Average Assets (ROA) rose to 1.7 per cent from 1.2 per cent.
The BISX-listed bank’s efficiency ratio, which measures the percentage of revenue consumed by operating expenses, improved to 57 per cent from 70 per cent in 2011.
It also doubled dividends to $0.14 per ordinary share, and based on the year-end share price of $2.10, these produced yield of 6.7 per cent, well ahead of most BISX-listed public companies.
With its share price increasing by 16 per cent in 2010, total returns to shareholders were nearly 23 per cent for the year.
Mr Sunderji said: “Total assets increased by some 10 per cent to $387 million, with loan assets increasing by 14 per cent to $278 million.
“Revenues increased by 25 per cent to $23.9 million, while operating expenses increased by 2 per cent to $13.6 million”.
He added “Liquidity remained robust and the Bank’s combined Tier 1 and Tier 2 risk weighted capital ratio of over 20 per cent comfortably exceeded the Central Bank of the Bahamas (CBOB) benchmarks and, despite new, more stringent requirements for the calculation of risk-weighted capital under the Basel III regime as promulgated by CBOB, the bank remains confident that it will meet these higher benchmarks.”
Mr. Sunderji further said: “The bank’s results are encouraging in light of the headwinds from a tepid economy, high unemployment, muted credit demand and continuing deterioration in asset quality.
“Non-performing loans (NPL), or loans past due 90 days or more, remained elevated in 2012. NPL as a percentage of total loans deteriorated to 7.8 per cent from 7.5 per cent in the prior year, but remained well below the industry average of 13.9 per cent.
“The bank increased its provisions for loan losses by 98 per cent during the year and recorded a charge of $3.95 million, reflecting both the increased size of the loan book and general difficulty in resolving delinquent mortgages.”