Bahamas - FirstCaribbean International Bank

Management’s Discussion and Analysis
Of Operating Results and Financial Condition for the Fiscal Year Ended October 31, 2007
Restatement of Financial Statements
The financial statements reflect the restatement of 2006 comparative numbers
(and 2005 where applicable) to reflect the following: 1. The impact of the
change in accounting policy from trade date to settlement date accounting for
all purchases and sales of financial assets through profit and loss; 2. A change
in the Bank’s hedge accounting treatment; and 3. A change in accounting
treatment and classification of certain fee income deemed to be a part of the
effective interest rate of the underlying financial instruments – primarily loans –
from operating income to interest income.
million, an increase of $43.1 million, or 17.6%, over last year. As discussed in
Note 19 to the financial statements, interest and similar income is generated
primarily from loans and advances and investment securities, which accounted
for over 82% of total interest income in both reporting years. Interest income
from loans and advances to customers increased $12.4 million, or 6.7%. Interest
income from investment securities increased $30.7 million, or 196%. Interest
income from the trading portfolios increased by $3.4 million, or 14.9%.
Net Interest income
($ thousands)
Total Revenue
($ thousands)
Total interest expense increased by $50.0 million or 55% primarily due to a
combination of increased deposit volumes and rates. Interest expense from
customer and bank deposits increased by $31.1 million as customer deposits
grew by $157.5 million, or 4.5%, over last year.
Net Interest Income and Margin
Net interest income (NII) represents interest earned on loans, securities and
deposits with other banks, less interest paid on deposits from customers and
banks and other borrowings. NII for the year decreased $6.9 million, or 5%, from
$154 million last year to $147 million in 2007. Total interest income was $288.6
The net interest margin, which refers to the interest spread earned by the Bank
on total assets and total liabilities, decreased to 3.2% for the year.
2004 2005 2006 2007
Net interest margin 3.8% 3.8% 4.0% 3.2%
47