Job cuts in the public sector appeared to have triggered more bad loans, a major lender has reported, even as its profits from a merger grew in the last year.
A year after Signia and Globe Finance merged their operations to form SigniaGlobe, the non-bank financial institution is reporting a net profit of $5.6 million for the financial year ending December 31.
But in a joint statement accompanying the audited financials, chairman Sir Geoffrey Cave and chief executive officer Paul Ashby blamed job losses in the public and private sectors for weakening demand for loans and advances.
“These circumstances also affected the company’s delinquency experience. Throughout the year, the management has maintained a tight rein on non-performing loans, employing several measures to ensure customers met their commitments. Despite this, there has been an increase in the company’s delinquent accounts in 2019,” they noted.
The senior executives said the SigniaGlobe team would continue to carefully manage loan delinquency during the coming financial year.
The 2018 amalgamation that created the SigniaGlobe Financial Group Inc. also enabled a large deposit base for the new entity, they said.
Sir Geoffrey and Ashby said: “Very low deposit rates in the commercial banking sector, as well as Government’s restructuring of their debt securities, also meant that investment opportunities providing a viable yield were now limited.
“With these factors in play, management undertook several initiatives to reduce the level of excess deposits and hence interest expenses. This strategy produced an 8.8 per cent decrease in the company’s deposit base from… $388.8 million to $354.7 million.”
The SigniaGlobe executives said they were banking on Barbadians taking additional medium-term investment risks, following the 2018 general election and the improved economic outlook for the island.
SigniaGlobe, a subsidiary of the Cave Shepherd Group, was given a clean audit report from accounting firm PwC.
