Mortgage lender’s net profits drop near 65 percent over 3-month period

Mortgage lender’s net profits drop near 65 percent over 3-month period

NASSAU, BAHAMAS — A mortgage lender has reported its net profit for the three moths ended January 31, 2021 was down more than 60 percent compared to the corresponding period in the prior year.

The BISX-listed Finance Corporation of The Bahamas (FINCO), in its first quarter financial statement, noted that the bank’s net profit for the three months ending January 31, 2021 was $4 million, representing a $7.1 million decrease or a 64 percent decline when compared to the corresponding period the prior year.

“The decline in profit is predominantly due to higher provisions and, to a lesser extent, lower interest revenues,” it was noted.

The bank noted that its capital ratio continues to be strong and above regulatory requirements at 45.55 percent and is comprised of mainly Tier I capital.

The Central Bank, in its Monthly Economic and Financial Developments report for March, noted that banks’ credit quality indicators weakened during the month of March, as total private sector arrears increased by $68.1 million (9.4 percent) to $795.9 million, resulting in the attendant ratio moving higher by 1.3 percentage points to 14.3 percent of outstanding loans.

“A breakdown by average age of delinquency revealed that short-term arrears (31 to 90 days) advanced by $65.8 million (27.2percent) to $308 million, thereby elevating its accompanying ratio by 1.2 percentage points to 5.5 percent,” the Central Bank noted.

“Similarly, non-performing loans (NPL) rose by $2.3 million (0.5 percent) to $488 million, corresponding to an eight basis point firming in the non-accruals rate to 8.7percent.

“A breakdown by loan type showed that consumer delinquencies grew by $50.4 million (23.2 percent) to $267.1 million, underpinned by respective increases of $47.2 million (67.1 percent) and $3.1 million (2.2 percent) in the short-term and long-term categories.

“Likewise, mortgage arrears rose by $30.8 million (6.9 percent) to $475.6 million, as the short-term segment increased by $30.7 million (21 percent), while the non-accrual segment was relatively unchanged at $298.9 million.

“In a partial offset, commercial delinquencies reduced by $13.1 million (19.8 percent) to $53.2 million, due to both short and long-term balances declining by $12.2 million (47.3 percent) and $0.9 million (2.3 percent), respectively.

“Despite the rise in arrears, commercial banks decreased their provisions for loan losses by $6.5million (1.1 percent) to $573.7 million in March.”