Bahamas - FirstCaribbean International Bank

Management’s Discussion and Analysis
Of Operating Results and Financial Condition for the Fiscal Year Ended October 31, 2007
Income Producing US Dollar
($ million)
interest and loan fee deferrals, was $2,403 million at the end of this fiscal year
compared to $2,411 million last year, a decline of $8 million. Of this change, $6
million is attributable to the government securities purchased under agreement
to resell which are classified in the loans portfolio for accounting purposes.
Income Producing US Dollar
($ million)
The investment securities are securities that the Bank intends to hold for an
indefinite period of time. These investments are not intended to be traded, but
may be sold in response to liquidity requirements or other changes in market
conditions. Such investments represent debt securities, including bonds issued
by governments or their related agencies, as well as corporate bonds. The B$
investment securities form a part of the liquid assets requirement prescribed by
the Central Bank of The Bahamas. The investment securities portfolio increased
by $187 million to $880 million (excluding accrued interest) at October 31,
2007 as additional available for sale securities were purchased. Included in
investment securities are Government bonds with a par value of $280 million that
are pledged pursuant to repurchase agreements and for which a corresponding
liability is included as other borrowings.
Loans
At $2,464 million, gross loans and advances to customers (excluding accrued
interest) remained fairly consistent with the previous year-end position of $2,477
million. Total loans net of the allowance for loan losses and excluding accrued
As noted, the performance of loans and advances to customers — comprising
mortgages, personal loans and business loans — was mixed. On a gross basis,
mortgages grew by 8%, while personal and business loans decreased by 4% and
7% respectively.
Total provision for loan losses decreased by $5.2 million to $41.7 million, with a
total charge of $12.3 million to the statement of income for the year, compared
to a charge of $5.3 million last year. In keeping with the bank’s conservative
approach, provisions for specific credit risk increased $14.3 million while the
general provision for inherent risk decreased $2.0 million. Non-performing loans
increased by $24 million to $158 million at year-end.
The ratio of the total provision to total loans decreased from 2.0% to 1.8% at
October 31, 2007. The ratio of specific provision to non-performing loans also
decreased from 32.0% to 22.9%.
50