FirstCaribbean braces for more customer defaults

The Caribbean’s largest commercial bank has registered a staggering near 70 per cent drop in its third quarter profits as it makes provisions for increasing credit losses due to customers defaulting on loans.

The Barbados-headquartered FirstCaribbean International Bank (FCIB), in its recently published third-quarter condensed consolidated financial statements for the period ending July 31, reported net profit for the quarter of US$15.2 million. This was significantly down from the US$48.6 million the institution recorded for the same period last year.

According to the financial statements, net income of US$27.7 million was adjusted for a US$14 million provision for credit losses and related income tax credits of US$1.5 million.

In its unaudited statements for the first nine months of this financial year, the FCIB group recorded total revenue of US$436.84 million, and operating expenses of US$302.31 million.

In comments on the financials, chief executive officer Colette Delaney told shareholders: “The incremental provision for credit losses reflects updated forward-looking views of probability of defaults, loss-given defaults and macro-economic forecasts, based on a more recent global outlook due to the impact from COVID-19.”

She said the bank’s results reflected the ongoing downturn created by the pandemic, which she said included declining US interest rates, more credit losses and an overall decline in business activity in the region.

“During this difficult period, the bank continues to place emphasis on supporting our clients as well as reducing our discretionary expenditures,” Delaney said.

The FCIB chief executive emphasised that at the end of the third quarter, the bank’s Tier 1 and capital ratios were 12.6 and 14.4 per cent respectively, and this was “in excess of the applicable regulatory requirements”.

The directors of FCIB approved a regular quarterly dividend to shareholders of US$0.012 per share.

Meanwhile, the bank this past weekend announced the planned closure of its Oistins, Christ Church branch from November 27. FCIB will also end in-branch teller transactions at the Sunset Crest, St James branch from November 2. (IMC1)