CIBC FirstCaribbean International Bank Jamaica made $1.1 billion in annual profit for year ending October 2023, which was 70 per cent better than the $663 million earned the previous year.
The bank reported a double-digit rise in the value of its loan book, and also benefited from increased interest charges on loans to customers.
Locally, FirstCaribbean is one of the smaller of the eight commercial banks in operation in Jamaica, ranked at No. 6 in assets. It’s one of a chain of regional banks owned by Canadian Imperial Bank of Commerce, or CIBC.
In the past year, the bank recorded improved revenues of $10.2 billion, up from $8.9 billion, while its loan book grew 15 per cent, from $77 billion to $89 billion.
The rise in FirstCaribbean’s loan portfolio slightly bettered the wider banking sector, which grew 13 per cent to $1.2 trillion, according to data from the Bank of Jamaica, which regulates commercial banks.
Nigel Holness, managing director at FirstCaribbean Jamaica, said the bank focused on both existing clients and new clients to grow its loan portfolio in the financial year.
“With the pandemic behind us, we saw increased demand from both corporate clients, small and micro enterprises, along with greater demand for personal credit including mortgages,” Holness told the Financial Gleaner.
He added that the bank grew because it capitalised on the opportunities that surfaced.
“The improvements in the economic conditions did assist in restoring confidence in the minds of many investors, who got back on track with their expansion plans, which we were happy to support,” he said.
The average interest yield during the year on loans and advances was 8.47 per cent, up from 7.28 per cent in 2022, the bank’s financials indicated.
During the year, more clients paid interest on their loans and it resulted in a dip in the non-performing debt to $838 billion or about 0.9 per cent of its loan book. A year earlier its NPLs were 2.0 per cent or $1.58 billion in 2022.
Comparatively, the overall commercial banking sector had 2.5 per cent of non-performing loans, or NPLs, on average as at September.
Loans get categorised as non-performing when borrowers miss interest payments on the debt for three months. After that period, the loans become impaired.
For FirstCaribbean, its impaired loans amounted to $412 million for the 2023 year, half of which related to business and government loans, while personal loans accounted for about one-third. The remainder related to mortgages. In 2022 impaired loans hovered at $606 million led by personal loans, then business and government loans.
Customer deposits grew in the financial year to $145.6 billion from $125.4 billion, signalling increased activity at the bank. The increased earnings, however, did not translate to higher capital, which was flat at $14 billion. Holness explained that it reflected both mandatory and discretionary transfers, rather than a reduction in asset valuations.
“So the increase will be reflected in quarter one of the new fiscal year,” he said.
The Bank of Jamaica hiked interest rates in years 2021 and 2022 to cool down inflation. The banks increased lending rates in response, giving them more income on loans taken out by customers, but the central bank’s policy action also placed pressure on the fair value of assets, which were accumulated when yields were low.
Holness says FirstCaribbean remains “confident” in the central bank’s ability to use the various monetary tools at its disposal to manage inflation and address any hint of a recession in 2024.
The wider FCIB network encompasses 12 countries and eight operating companies located in The Bahamas, Barbados, Cayman Islands, Jamaica and Trinidad & Tobago, according to group’s financial report
The regional group made profit of US$260 million on revenue of US$712 million for 2023. That’s up from profit of US$184 million on revenue of US$577 million in 2022. Capital stands at US$1.35 billion to October 2023.
Parent company CIBC holds 91.7 per cent interest in FirstCaribbean International Bank, which is listed on the Barbados and Trinidad & Tobago stock exchanges.
The regional bank is to be rebranded to CIBC Caribbean Bank, subject to shareholder approval.
“The transition to the new legal name will align with the adoption of the CIBC brand,” FCIB said in a notice to stakeholders.