BOB sees $7 million net losses amid COVID-19 pandemic

Bank of The Bahamas (BOB) closed its fourth quarter with a net loss of $7.4 million for the year, which ended June 30, its Managing Director Kenrick Brathwaite said in the bank’s just-released financial performance statement.

Due to the COVID-19 pandemic, the bank increased its net provision in loan losses to $15.3 million.

Brathwaite said despite the uncertainty surrounding the length and extent of the impact from the COVID-19 pandemic, the bank “remains committed to overcoming the crisis and its strategic plan in strengthening of our systems, expanding of products and improving overall customer service”.

“Amid this challenge of operating an essential business under such conditions, the bank recorded net operating income of $14.3 million for the 12 months ended June 30, 2020, compared to $4.6 million in June 30, 2019,” he said in a manager’s report. 

“However, this net operating income has been offset by the provision for impairment losses of $6.3 million and credit loss expense of $15.3 million resulting in an overall net loss of $7.4 million for the year ended June 30, 2020 compared to $2.9 million of net income in the prior year ended June 30, 2019.

“Net credit loss expense for the quarter ended June 30, 2020, increased by $6.7 million, compared to the quarter ended June 30, 2019; and $13.6 million increase for the year ended June 30, 2020 vs. June 30, 2019 due to the pandemic. The bank also recorded $6.3 million provision for impairment losses on sovereign and corporate financial asset exposures due to the pandemic.”

Compared to the same period last year, the bank’s total operating income increased by $6 million year-over-year, explained largely by increases in net interest income.

“The positive variance in net interest income for the year was due to the increase in interest revenue by $5.3 million, primarily from interest on consumer loans and deferred loan fee change in accounting estimate; and lower interest expense by $1.3 million due to a decline in certain interest rates and deposit products,” Brathwaite said.

“However, the impact of the pandemic was immediately felt by the bank on its non-interest income resulting in an overall decline of $0.8 million and $0.5 million recorded for the current quarter and year to date, respectively.”

Despite these developments, BOB saw an increase in its composite of loans and advances, which ended the year at a net of $370.5 million, and maintained a strong financial position with total assets of $822.0 million.

“The bank’s liquidity position remained strong as its cash and cash equivalents stood at $180.7 million, a $23.3 million or 14.77 percent increase since prior year,” the manager’s report read.

The bank’s key capital ratio is in compliance with regulatory requirements, with CET1 of 37.5 percent, well above the Central Bank’s minimum requirement of 9.6 percent.

A Central Bank-imposed increase in bank license fees contributed to BOB’s operating expenses to increase by $1.9 million, along with higher cleaning and sanitation expenses associated with the COVID-19 pandemic, and additional insurance and IT-related costs.

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