NASSAU,BAHAMAS — Royal Bank of Canada’s (RBC) Bahamian mortgage arm will continue to be “challenged” with mortgage growth and credit losses resulting from high levels of non-performing loans in a low growth economy, its chairman Robert Johnson has warned.
In a message to shareholders in the BISX-listed lender’s 2019 annual report, Johnson said the bank recorded $20.8 million in net income for the fiscal year which ended October 31, 2019.
This compares to $25.3 million in net income recorded in 2018, he said.
“This decrease is attributed primarily to lower interest income and higher provisions during the year,” Johnson continued.
“Other operating costs remained relatively flat year over year with a four per cent reduction. Our core earnings under-performed and continue to be under pressure from lower mortgage growth and lower mortgage interest rates.
“Non-performing mortgages of $101.8 million (2018: $124.3 million) as a percentage of the portfolio was 13 percent at the end of the fiscal year. This result is compared to 15.47 percent at the end of fiscal 2018 and compared to the industry at 1 percent as of October 2019.”
Johnson said: “Operating in a low growth economy, RBC FINCO will continue to be challenged with mortgage growth and credit losses resulting from high levels of non-performing mortgages.
“Notwithstanding the growth and non-performing loans challenges, the bank continues to maintain a strong capital position well above regulatory guidelines; as well as adequate provisions for non-performing loans, we remain profitable and there are no liquidity issues.”