Business

More losses at RBTT

Wednesday, June 22, 2011    

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BAD debt continued to plagued RBTT Bank Jamaica’s profitability as the Bank of Jamaica (BOJ) accounted for a $593-million loss to the commercial bank for the five-month period ended March 31, 2011.

All the loss may not go straight to RBTT’s bottomline, but the BOJ required the bank increase its loan loss provision by over $900 million amidst write-offs of some non-performing loans.

Yesterday, in a written response to Business Observer queries, RBTT said the $593 million loss “reflects the difference between operational profit reported under International Financial Reporting Standards (IFRS) for the five months ended March 31, 2011 and BOJ loan loss reserves booked”.

In addition, the bank said that loan loss provision as per IFRS requirement was reduced — from $1.28 billion at end December 2010 to $1.14 billion at end March 31, 2011 — as a result of “write-off of facilities previously classified as Nonperforming”, while “the increase in BOJ Provisions (from $611 million to $1.56 billion) reflects the increase required by the BOJ”.

RBTT Jamaica racked up $1.25 billion in losses during the 19 months to October 31, 2010, before a $383-million tax credit reduced the net loss to $864 million. Then, a $2.66-billion impairment loss on loans and advances during the review period (compared to $175 million during the year ending March 31, 2009) dragged the company into a huge loss position.

RBTT's total loans net of provision for credit losses fell from $38.1 billion to $31.2 billion at end-October 2010, according to its audited financial statements, and stood at $31.15 billion as at December 31, 2010, before falling to $27.5 billion at the end of March 2011, according to BOJ data.

RBTT told the Business Observer that it “has been focusing efforts in the specific areas of (i) Risk Assessment and Credit Decisioning (ii) Portfolio Management and (iii) Problem Loan Management so as to adopt policies and best practices and embed and reinforce these procedures and guidelines into our day-to-day lending activities”.

“These efforts, after being successfully implemented, have established firm strategies to guide the bank in how to grow and manage our credit portfolio in terms of quality as well as collecting those loans that have gone bad. The current economic situation, with slow GDP growth in the region, continues to challenge banks in their drive to improve credit quality in the near term,” added the statement.

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