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CIBC loan deferrals decrease by $420m

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Just $6m worth of loans remained in CIBC FirstCaribbean International Bank (Bahamas) COVID loan deferral initiative at end-October 2021 compared to $426m exactly one year earlier.

The BISX-listed institution, in its just-released annual report, disclosed that “gross outstanding loans” remaining in its pandemic moratorium at the 2021 financial year-end comprised $2m worth of mortgages; $4m in business and government loans; and $22,000 in consumer loans.

This compared to $86m in mortgages; $327m in business and government loans; and $13m in consumer loans which were in the COVID deferral initiative at end-October 2020, when the pandemic was at its height.

CIBC FirstCaribbean also revealed: “Of the loans that were under the programme as at October 31, 2021, the gross outstanding balance of loans that received extension of an initial deferral, or in the process of being provided an extension, was $6m.” This compared to $205m some 12 months before.

The data provides a glimpse into the impact the economy’s post-COVID re-opening has had on the ability of consumers and businesses to again start meeting their loan repayments, as restrictions and protocols are eased in line with the decline in cases.

CIBC FirstCaribbean’s Bahamian subsidiary enjoyed a positive $146m bottom line swing during the 12 months to end-October 2021, rebounding from a $63.543m net loss in a COVID-ravaged 2020 to produce an $82.183m profit a year later.

The reversal was driven chiefly by a $76m reduction in loan loss provisions, “as the current year reflected an improvement in our economic outlook”, while the $73m goodwill impairment charge taken in 2020 was not repeated and absent from the 2021 figures.

Breaking down its results into three business categories, CIBC FirstCaribbean revealed that profits generated by its retail and corporate/investment banking units easily outweighed a $5m loss produced by the wealth management division - its third consecutive year ‘in the red’.

On the retail banking side, the unit rebounded from a $19m loss in 2020 to generate profits of $32m. While the latter was $5m down on the $37m in net income generated in 2019, it was produced from $88m of revenues that were essentially flat with the prior two years.

“Total revenues were stable as lower performing loan income was partially offset by lower fund transfer pricing (FTP) on loans, and by higher foreign exchange commissions and cards services income. Net income increased year-on-year by $51m, driven by the lower revenue provision for credit losses,” CIBC FirstCaribbean said.

As for corporate and investment banking, 2021’s annual revenues of $82m was slightly down on the prior year’s $85m but ahead of the $80m generated in 2019. And profit was up significantly at $53m compared to $35m in 2020 and $43m in the pre-COVID days of 2019.

“Total revenues decreased year-on-year by $3m or 4 percent primarily due to lower FTP earnings on deposits, foreign exchange earnings and credit services fee income. These decreases were partially offset by higher net interest income. Net income increased year-on-year by $18m primarily as a result of lower provision for credit losses,” the bank added.

When it came to wealth management, CIBC FirstCaribbean saw revenues fall year-over-year from $14m to $10m. The fall was even greater compared to 2019’s $18m in top-line earnings. The unit’s 2021 loss was flat against the prior year’s ‘red ink’ of $5m, but more than double the $2m loss incurred in 2019.

“Total revenues decreased year-on-year by $4m or 29 percent as a result of lower FTP earnings on deposits due to lower margins. Net income declined marginally year-on-year as the lower FTP earnings were offset by lower internal expense allocations and provisions for credit losses,” the bank told shareholders.

Comments

realitycheck242 4 months ago

Ok Neil .....do an article showing the gross outstanding loans at the 2021 financial year-end for Commonwealth Bank . What are they doing different with their much larger loan loss provisions ?

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tribanon 4 months ago

You're gonna have to wait at least a week or so for that Commonwelath Bank story because Neil's free-lunch and free-dinner schedule is already choc-a-bloc full for the next week or so. LOL

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