Commonwealth Bank records 10 percent drop in profits for Q1

Commonwealth Bank records 10 percent drop in profits for Q1
Commonwealth Bank

NASSAU, BAHAMAS — Commonwealth Bank saw a 10 percent decrease in total profit for a ‘challenging’ first quarter of 2020 compared to 2019.

The bank said loan impairment expense increased by 22 percent, reflecting an increase in actual and expected delinquency brought on by the COVID-19 pandemic.

In its first quarter results for the three months ending March 31, the BISX-listed Bahamian bank noted that total profit for the first quarter of 2020 was $11.2 million.

This represents a decrease of $1.2 million or 10 percent compared to the same period in 2019, the report stated.

Total assets were $1.68 billion, compared to $1.7 billion as at December 2019.

Bank chairman Williams Sands Jr. said: “The first quarter of 2020 has been a challenging one for the Bank, the country and the world at large as the onset of the global COVID-19 pandemic caused significant adverse impacts on economic and market conditions which have continued into the second quarter.

“The Government of The Bahamas closed the country’s borders, implemented a nationwide lockdown, and restricted the provision of non-essential services after the Bahamas experienced its first COVID-19 case in March.

“In response to the economic impacts of the pandemic, a six-month forbearance was granted to the bank’s customers whose accounts were in good standing,” Sands Jr. said.

“The halting of travel across borders and the shutdown of economic activity resulted in furloughs in the hotel industry and many other industries throughout the country. As such, loan impairment expense increased by 22 per cent and reflects the increase in both actual and expected delinquency associated with these levels of economic activity.”

Sands noted that another negative impact of the COVID-19 pandemic was the significant decline in the US stock market” resulting in an unrealized loss on equity investment of $1.2 million.”

“In the prior year, the Bank recorded a gain of $1 million,” he said.

“On a positive note, since the quarter end, the US markets have rallied considerably essentially erasing the loss recorded for the first quarter.”

He noted that a 36 percent increase in fees and other income mitigated the impact on profit associated with the aforementioned factors.

Sands said: “It was a little over a year ago that the bank invested in the enhancement and expansion of its digital offerings which included the upgrade of its online banking platform and the introduction of its mobile app.

“This investment is now paying dividends as evidenced by the increased use and adoption of these services and the resultant increase in fees and other income.”

He also noted that during the quarter, the bank paid quarterly dividends totaling $5.7 million or 2 cents per share.

“Additionally, the Bank continues to maintain strong capital and liquidity ratios with capital adequacy in excess of 28 percent and liquidity ratio above 53 percent. These ratios are well in excess of Central Bank’s requirements of 17 percent and 20 percent, respectively and are indicative of the bank’s overall safety and soundness.”

Sands added: “Management continues to monitor developments relating to this unprecedented pandemic and its impact on the Bahamian economy, and is directing its operational responses based on existing business continuity plans, guidance from the government, and general pandemic response best practices.”

An earlier version of this article incorrectly referred to “Central Bank” in its headline. It has been corrected to reflect the accurate banking institution.