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Weak economy hits BNB hard

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Weak economy hits BNB hard

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Significant provisioning for bad debt, some troubled commercial and retail client loans, a dampened appetite for credit and a weak economy combined to deliver one of the Barbados National Bank’s (BNB) lowest performances in years.
However, BNB’s managing director and chief executive officer Derwin Howell, said the boom years of $54 million-plus profit could be achieved again but the bank was adjusting to an environment in which profit expectations were now much more conservative.
For the financial year ended September 30, 2011, BNB reported an after-tax profit of $15.12 million, which represented less than half the $36.03 million registered last year.
Its net interest income reached $98.94 million, down from $109.97 million in 2010.
In an interview with BARBADOS BUSINESS AUTHORITY, Howell explained: “In a nutshell, the times have changed . . . . back then, there were a lot of opportunities in the marketplace and a lot of developments that we financed and, obviously, we made a lot of profits from those. Banks’ fortunes follow the fortunes of the economies in which they operate.”
He revealed that the Republic Bank subsidiary had also been hit by Trinidad Cement Limited’s debt problems through another local subsidiary, Arawak Cement Plant.
Howell also conceded that the implementation of a new computer system had a negative impact on the bank’s performance.
“When you are trying to change a banking system, it is like a marathon runner undergoing surgery while running the marathon because you can’t shut down the bank, change the system and open back up.”
Against the backdrop of the economic downturn, and increasing delinquency on credit cards and personal loans, but less so on the mortgage lending side, Howell said more people were still prepared to borrow for housing.
“Despite the downturn, Barbadians are still investing in homes . . . . The bulk of our mortgages come from Barbados Mortgage and Finance and they have done very well this year,” he disclosed. (GE)