FIRMS unwilling or unable to service debt owed to FirstCaribbean International Bank Jamaica (FCIBJ) were the main contributors to a huge loan loss impairment that almost wiped away the bank’s net income during the three months to July 31, 2010. The bank earned just under $4 million in net income during the review period compared to $176 million it made in the comparative period in 2009.

“Loan loss expenses rose significantly by $178 million mainly on corporate loans,” said chairman Michael Mansoor, referring to the nine months ending July 31 in his statement to shareholders.

During the review quarter, the bank incurred loan loss impairment of $316 million, compared to $114 million during the comparative period in 2009, which represented the bulk of the $364-million loan loss impairment it recognised during the nine months to July 31, 2010.

“While every effort is being made to work with our customers to manage their debt obligations, loan loss expenses have increased as the credit portfolio is impacted by the prevailing economic conditions,” said Mansoor’s statement.

FCIBJ’s net interest income remained relatively flat, or was only down $4 million from year-earlier levels to $827 million during the review quarter.

Non-interest revenue declined by $68 million to $142 million.

And even though the bank reduced its non-interest expenses from $659 million to $652 million, the loan loss impairment dragged down pre-tax income to $337,000 during the quarter under review compared to year-earlier levels of $276 million.

The bank’s loan portfolio declined by $3.1 billion to $32.1 billion over the year to July 31, while deposits fell from $44.2 billion to $42.1 billion.

“Loan and deposit volumes continue to be adversely affected by the downturn in the level of economic activity,” added Mansoor’s statement. “The Board, management and staff will continue to monitor the economic conditions and take the necessary steps to ensure that the interests of all our stakeholders are promoted in these circumstances.”

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