Bahamas - FirstCaribbean International Bank

Management’s Discussion and Analysis
Of Operating Results and Financial Condition for the Fiscal Year Ended October 31, 2007
2004 2005 2006 2007
Total provisions to total loans 2.7% 2.1% 2.0% 1.8%
Specific provisions to non-performing loans 35.4% 34.6% 32.0% 22.9%
Deposits
Debt Securities in Issue
As discussed in Note 14, on November 3, 2006, the Bank issued $20 million in
redeemable floating rate bonds with maturity of November 3, 2011.
Equity
($ million)
Customer and bank deposits increased by $154 million, or 4% from last yearend,
to $3,638 million (excluding accrued interest) at the end of this fiscal year.
Total Deposits
($ million)
Equity & Capital Ratio
The return on equity for this fiscal year is 25.2%, a slight fall from the previous
year’s result of 25.3% (after restatement).
The growth in customer and bank deposits was primarily attributable to an
increase in fixed deposits, which increased by $144 million (6%) over last year
as fixed deposits from banks increased by $108 million to $642 million. Total
deposits from banks were $644 million.
The other attributing factor to the increase in customer and bank deposits was a
$12 million increase in demand deposits by business and governments.
The Bank continues to maintain a strong capital base and capital ratios well above
the regulatory requirements. Tier I capital generally includes share capital and
retained earnings less goodwill. Tier II capital principally comprises hybrid capital
instruments and general reserves. At October 31, 2007, the Tier I capital ratio and
the total capital ratio of the Bank (that is the ratio of capital to the risk adjusted
assets) were 14.81% and 15.08% respectively, both exhibiting improvements
over the previous year-end.
The return on assets for this fiscal year was 2.4%, down slightly from the previous
year’s return on assets of 2.6%. As with the previous year, the increase reflects
growth in net income combined with growth in average total assets. Net income
increased 9.1%, while the average total assets increased 21%, resulting in a lower
return on assets.
51