FirstCaribbean records rise in loan loss expenses

High loan loss provisions continued to be a problem for CIBC FirstCaribbean International Bank last year despite an otherwise satisfactory operating performance.
In the company’s 2012 annual report, chief executive officer Rik Parkhill noted that the credit environment continued to reflect the challenging economic climate and loan loss impairment expenses increased from 1.3 per cent of loans in 2011 to 1.7 per cent of loans in 2012.
According to management’s analysis, loan loss impairment increased by US$33 million or 37 per cent year on year due to higher specific allowances of US$23 million “driven by deterioration in  collateral values, new non-performing loans and updates to key assumptions mainly affecting business and sovereign and  personal loans”.
However, the ratio of non-performing loans to gross loans decreased to 12.4 per cent compared to 13.6 per cent at the end of 2011.
Chairman Michael Mansoor said that the bank’s profit of US$72 million was relatively consistent with the prior year at US$74 million.
“The economies of the majority of the territories in which we operate are heavily dependenton tourism, foreign direct investment and international transfer payments and all of these have been negatively affected by the lacklustre economic recovery in the United States and Europe.
“The Bank’s results however show that apart from the negative effects of the loan loss impairment allowances, the business of the bank continues to be encouragingly stable and provides a sound basis for better performances when economic conditions improve,” he said in the company’s 2012 annual report. (NB)