Home' Trinidad and Tobago Guardian : January 11th 2015 Contents CIBC/First Caribbean, in the
second quarter of 2014,
increased its loan loss pro-
vision and took a huge
impairment charge on its
intangible assets. These
actions resulted in the
bank reporting an after-
tax loss of US$150.8 million for its fiscal period
ended October 31, 2014.
In the interest of clarity, the bank has pre-
sented an addendum that shows its performance
for each quarter and for the full year. First, we
will consider its global results.
Changes in asset values
Total assets fell from the restated US$11.43
billion as at October 2013 to US$10.78 billion on
October 31, 2014, reflecting a decline of 5.7 per
While most line items exhibited declines, the
value of its investment securities rose to US$2.31
billion from the previous level of US$2.21 billion.
The major increase was observed with other debt
securities, which advanced to US$806.2 million
from US$654.66 million. Conversely, government
debt closed at US$1.48 billion from the previous
level of US$1.54 billion.
Cash and balances with central banks increased
to US$901.4 million from 2013 s US$727.1 million;
of this total, US$772.1 million represented non-
interest bearing deposits with various central
banks (2013: US$592.6 million).
On the other hand, balances due from banks
fell to US$912.3 million from US$1.58 billion as
at October 2013. Despite this lower figure, the
amounts that exceeded ninety days rose from
US$82.3 million in 2013 to US$138.8 million cur-
The net value of loans and advances closed
2014 at US$6.14 billion; this represented a decrease
of 3 per cent over the 2013 balance of US$6.33
Gross loans, before impairment charges and
other adjustments, fell by less than 1.0 per cent
to US$6.54 billion from 2013 s US$6.60 billion.
Higher loan balances were recorded for sovereign
and business loans, while mortgages and personal
loans exhibited declines.
Of the gross loans, US$2.12 billion (32.5 per
cent) represented amounts due by individuals
and individual trusts while US$967.3 million (14.8
per cent) was due from central governments.
Geographically, The Bahamas, with US$1.87
billion in loan balances, represented 28.6 per cent
while Barbados, with US$1.35 billion, accounted
for 20.6 per cent of the total loan portfolio.
The cumulative provision for impairment of
US$407.57 million combined with positive adjust-
ments of US$12.5 million saw the net loan balance
close 2014 at US$6.14 billion.
Customers deposits declined to US$9.17 bil-
lion from US$9.61 billion as at the end of Octo-
ber 2013. The average rate of interest paid on
these sums fell to 0.7 per cent from 0.8 per
cent in 2013.
Only the deposits payable after notice category
increased, moving to US$2.50 billion from
US$2.44 billion as at year-end 2013.
In terms of currency concentration, 48.3 per
cent (US$4.43 billion) of total deposits are
denominated in US dollars with 15.8 per cent
(US$1.45 billion) denominated in Barbados dol-
Other liabilities declined to US$106.6 million
from 2013 s US$148.4 million. The components
of this line item are accounts payable and accru-
als, restructuring costs and sums due to CIBC.
Consistent with the loss incurred for the
year, retained earnings fell to US$386.8 million
from the previous level of US$574.4 million.
Total equity as at year-end 2014 was US$1.313
billion down from US$1.505 billion as at October
2013. With 1,577,094,570 shares outstanding,
each share has a book value of US$0.83.
Income and profits
Interest income declined to US$455.2 million
from US$466.3 million in 2013, reflecting a fall
of US$11 million (2.38 per cent). The biggest
decline was noted in interest on loans, which
came in at US$377.8 million from last year s
Interest paid to customers and lenders reg-
istered at US$86.39 million; this was US$6.7
million (7.2 per cent) lower than the US$93.1
million paid in 2013. Interest on deposits moved
from US$78 million in 2013 to US$67.6 million
this year. Meanwhile, interest on borrowed
funds increased to US$17.4 million from US$13.7
million in 2013.
The net effect of these changes saw net inter-
est income decline to US$368.8 million from
US$373.2 million in 2013.
On the other hand, other operating income
improved to US$159.5 million from the 2013
level of US$156.7 million.
The major components of other operating
income are net fee and commission income
and foreign exchange commissions. The former
rose to US$105.6 million from US$102.4 million
while the latter increased to US$40.5 million
from US$38.5 million.
These changes resulted in total income of
US$528.3 million versus US$529.9 million for
Operating expenses exhibited a welcome
decline down to US$350.4 million from US$397.1
million in the 2013 period. Driving this fall was
a reduction in staff costs totalling US$41.44
million down to US$183.7 million. This is in
line with the bank s continuous restructuring
exercise as head count fell to 3,053 from 3,427
as at year-end 2013.
Loan loss impairment rose to US$206.3 mil-
lion from US$151.4 million in 2013. In addition,
the bank took a charge of almost US$116 million
on its intangible assets; US$115 million related
to the Bahamas while US$946k related to St.
Vincent. The combination of these two factors
was deemed necessary to take care of what
was described as "legacy issues".
These changes resulted in a current year s
pre-tax loss of US$144.3 million. At the after-
tax level, the figure was US$150.8 million. Of
this total, US$149.1 million related to equity
holders of the parent.
Segment and country performance
FCIB divides its businesses under three main
headings, retail banking, wholesale banking and
wealth management; the administration column
includes the earnings on economic capital and
the capital charges for treasury along with the
offset for the other segments.
In 2014, all segments generated higher external
revenues. The overall decline in revenues was
concentrated in the administration segment.
The huge loss incurred by the retail banking
units was due primarily to the high loan loss
In contrast, the wholesale banking units
delivered an improved performance, moving
from a loss in 2013 to a small profit. This result
was helped by lower loan loss impairments
together with reduced cost and capital charges.
In this segment, the Trinidad operations con-
tributed 8.0 per cent to the external revenues.
Wealth management continued to deliver
good results but at a lower level. The US$3 mil-
lion profit decline was largely due to higher
loan loss impairments combined with reduced
revenues from other segments.
Even with lower external revenues, the admin-
istration and treasury unit delivered a higher
profit. For both 2013 and 2014, external revenues,
before eliminations, were little changed at
US$612 million. Significant increases were expe-
rienced in both Barbados and The Bahamas.
The former s revenues advanced from US$174.2
million to US$180.4 million. In the latter s case,
the improvement was from US$153.7 million
to US$163.4 million.
Three territories experienced lower revenues:
Caymans, Jamaica and Trinidad. The Caymans
revenues fell to US$78.8 million from 2013 s
US$85.9 million while, in Jamaica, the move-
ment was from US$44.6 million to US$42.4
million. Here in Trinidad, revenues (after elim-
inations) in 2014 registered at US$15 million,
down from almost US$18 million in 2013.
Dividends and share price
Over the past three years and despite lower
and non-existent profits, FCIB has continued
to pay a dividend of US$0.03. This has reduced
its retained earnings. This action was thought
necessary to help build and retain investor con-
fidence and is consistent with a long-term per-
On the local exchange, the share price has
for many years experienced an almost contin-
uous decline. For much of 2011 the share price
was quoted at TT$9.00. By the end of 2012,
its price was TT$7.50. At the start of January
2014, it was at TT$6.50 and, after dipping to
TT$4.75, ended 2014 at TT$5.00.
With an annual dividend of US$0.03
(TT$0.19) and a price of TT$5.00, the share
gives new investors a yield of 3.8 per cent,
which is quite respectable in the current envi-
FCIB seems to have bit the bullet and now
appears poised for growth and improved prof-
itability. All banks face the problem of narrowing
interest margins; however, it seems very likely
that major growth will come from commissions,
fees and similar transactions.
The bank should also benefit from its lower
cost structure and improved systems and pro-
cedures, which are being implemented on a
phased multi-year basis. Also, any increase in
interest rates should help the bottom line.
When it releases its first quarter results at
the end of February or early March, we should
have a better idea as to what to expect during
the current fiscal period. Perhaps, this year the
share price should, once again, start moving in
a northerly direction?
JANUARY 11 • 2015 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
STOCKS | SBG11
FCIB results for 2014
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