LOAN loss impairments led CIBC FirstCaribbean Bank Jamaica Ltd to record a $95-million net loss for its year ending October 2014, according to just released data.
However, it comes within the context of wider losses from the bank’s regional parent.
Despite the loss, the local bank continued to reduce its year-end losses which are now roughly one-tenth that of the $927.4-million loss recorded in October 2013. In fact, Chief Executive Rik Parkhill told the Jamaica Observer in a December interview that the bank was returning to profitability on a quarter by quarter basis.
“Jamaica was profitable in the fourth quarter,” he said at the New Kingston head office in Jamaica. “We have overcome some of the problems we have had in Jamaica with non-performing loans and are now expanding our retail and corporate business.”
Parkhill made the comments following a board meeting but did not disclose the local financials at the time. The financials were subsequently published late December.
The local bank made $4.4 billion in total income compared to $4.2 billion a year earlier while cutting operational expenses by roughly 10 per cent year on year to $4.3 billion. But the bank recorded a $235-million ($870 million in 2013) loan impairment which contributed to its loss.
“Jamaica, for us, is of huge strategic importance because I do not think you can be a successful regional bank without having a significant presence in Jamaica,” he added.
The local bank’s segment results show that its retail banking recorded a $1.18-billion loss before taxation or flat year-on-year; wholesale banking made a $671-million profit compared with a $436.2-million loss a year earlier; and administration made a $436.5-million profit or 51 per cent more than a year earlier.
Retail banking entails a full range of branch, ABM and Internet banking services for clients. Wholesale banking entails corporate banking, investment banking and client solutions group.
Concurrently, the bank updated its over decade-long legal suit in which a former customer counterclaimed $2 billion. The Business Observer noted that that case was documented and updated annually from at least the 2002 annual report.
Parkhill previously told the Business Observer that CIBC FirstCaribbean Jamaica will spend upwards of US$2 million ($228 million) to build two new branches — one in Fairview in Montego Bay, and the other in Santa Cruz, St Elizabeth.
The move is aimed at increasing the bank’s branch network to 15 by summer 2015. The bank will also set up its wealth management arm in Jamaica, which follows steps taken recently in the Cayman Islands and The Bahamas. The new initiatives are aimed at expanding CIBC’s retail and corporate customer base.
The overall CIBC FirstCaribbean group, which operates throughout the region, posted a loss of US$151 million for its year ending October 2014. This is based largely on retail non-performing mortgages in The Bahamas and the bank’s steps to limit its future impact. As such, the bank made an impairment of US$206 million, its highest in at least five years, in addition to a one-off US$116 million loss of intangible assets.
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CIBC FirstCaribbean reports $95-million loss, but...
