FirstCaribbean Jamaica exits market at nine-year low
Published:Wednesday | January 4, 2012 | 12:00 AM
FirstCaribbean International Bank Jamaica (FCIBJ), in its last report to the market, said there was a steep drop in yearly profit to J$157 million, its worst performance in close to a decade.
The stock was redeemed at J$13.25 per share and delisted at the close of December.
The bank last reported similar levels of profit nine years ago in 2002, when it made J$169 million. Its peak year was 2009 when it made J$887 million off record revenues of J$4.36 billion.
This year, the bank's revenues performed at similar levels - J$4.3 billion - but its margins were erased by large expenses.
In fact, FCIBJ would have recorded higher profit year-on-year were it able to nullify the J$166.9-million net loss recorded in its fourth quarter, August to October 2011.
Michael Mansoor, chairman of the bank, blamed the reduced profitability on "higher levels of loan losses and operating expenses".
Loan losses almost doubled from J$341 million to J$598 million.
Compared to 2010, the bank's core earning or net interest income fell two per cent, while non-interest income rose 17 per cent over the prior year.
Mansoor reasoned that "interest income fell mainly due to lower average productive loan balances throughout the year, but this decrease was substantially offset by reduced interest expense due to lower interest rates".
Higher non-interest income was driven primarily by securities gains.
The four per cent increase in non-interest expenses year-on-year was due primarily to increased staff costs, he added.
Stockholders' equity stood flat year-on-year at J$7.8 billion as at October 2011, which represented a risk-based capital ratio of 23 per cent, exceeding the minimum requirement of 10 per cent stipulated by the Bank of Jamaica.
Future opportunities
"This allows the bank to be in a position to take advantage of future opportunities," Mansoor said.
The board of FirstCaribbean Jamaica took the decision to delist effective December 30, having failed to conform with Jamaica Stock Exchange (JSE) regulations which require that no one shareholder own more than 80 per cent of listed shares.
The bank's Barbados-based parent, CIBC FirstCaribbean International, owns 96.3 per cent. FCIBJ's 265.757 million shares were trading at J$6.50 prior to delisting. The delisting price of J$13.25 per share pushes the company's value to J$3.5 billion, from J$1.73 billion.
FirstCaribbean Jamaica is the fourth-largest bank of seven, with assets of J$51 billion. The commercial banking sector is valued at J$588 billion by assets.