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Cibc’S Corporate Unit In 40% Bad Loan Shrink

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

CIBC FirstCaribbean’s Bahamian corporate and investment banking unit saw non-performing loans shrink by almost 40 per cent in its 2016 financial year, as the bank continued its “solid” recovery from past credit provisioning.

Marie Rodland-Allan, CIBC FirstCaribbean International Bank (Bahamas), managing director, told shareholders that the unit had also managed to increase productive loans by a net 20 per cent during the year to end-October 2016.

Writing in the bank’s annual report, Mrs Rodland-Allan said: “The corporate and investment banking team achieved great success in 2016, driven by a net increase in productive loans of 20 per cent and a notable reduction in non-performing loans of almost 40 per cent.

“New client acquisition and loan growth were key contributors to this year’s performance, and remain paramount to our strategy moving forward. We also made strategic internal changes that allowed us to create a formal customer service team.”

This, Mrs Rodland-Allan added, had led to improved customer service, enabling CIBC FirstCaribbean to “increase cross-selling and penetration of non-credit products”.

CIBC FirstCaribbean enjoyed a steady, unspectacular year, growing its bottom line by 6.6 per cent to $70.573 million, compared to $66.213 million in the 2015 financial year. A key factor in the improvement was a $3 million reduction in loan loss provisions.

“The specific allowances decreased by $6 million as a result of lower incremental provisions and higher recoveries,” the bank added in its management analysis of 2016.

“The ratio of loan loss impairment to gross loans was 0.5 per cent compared with 0.7 per cent at the end of 2015. Non-performing loans to gross loans declined to 8.9 per cent at the end of 2016, compared to 12.9 per cent at the end of 2015. The coverage ratio increased from 63.5 per cent in 2015 to 76.3 per cent in 2016.”

CIBC FirstCaribbean International Bank (Bahamas) saw revenues generated by its retail and business banking segment remain flat at $95 million, “as lower loan earnings as a result of lower yields was offset by lower interest expense and increased service fee income.

“Segment results declined year-on-year by $1.1 million as a result of lower external and internal revenue and higher allocated costs, which offset the decline in loan loss impairment,” the bank added.

Its wholesale banking unit, which comprises corporate lending and investment banking, saw external revenues drop by $0.9 million - taking the total to $53 million - as a result of lower interest recoveries.

“Segment results declined year-on-year by $3 million driven by lower revenues and higher allocated costs,” CIBC FirstCaribbean added.

As for wealth management, higher loan earnings and reduced interest expense was “offset by lower fees and commissions” to leave total external revenues flat at $2 million.

“Segment results decreased year-on-year by $2.1 million, driven by higher allocated costs and capital charges, and higher operating expenses,” CIBC FirstCaribbean said.

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