FirstCaribbean International Bank Limited (FCIB) experienced a 24 per cent uplift in its revenues to US$715.46 million as higher interest rates brought up its interest income along with transaction volumes returning to normal levels in rebounding Caribbean economies.

The regional banking entity based in Barbados released its 2023 annual report on Monday highlighting that its interest income moved up 39 per cent to US$566.24 million, which was driven by it collecting 26 per cent more on its loans and advances to the tune of US$422.83 million. This was also reflected in it collecting double on its financial securities portfolio and cash holdings.

Even against the backdrop of higher interest rates, FCIB’s interest expense of US$54.33 million grew at a slower pace than the growth in its interest income. A bump in foreign exchange commissions also pushed up its operating income by three per cent to US$203.54 million.

“The year’s significantly improved results were largely due to the revenue uplift from higher US benchmark interest rates in our primary US dollar denominated operating companies in The Bahamas and the Cayman Islands. While the high interest rate environment has improved margins in 2023, loan growth has been moderate in line with costlier debt and clients’ debt management strategies. Deposit growth has also slowed, as some client inflows have been directed towards alternate investment products or debt repayment,” stated FCIB Chief Executive Officer Mark St Hill in the annual report. Hill just completed his first year as CEO after taking over from former CEO Colette Delaney.

FCIB’s loan origination for personal and business banking hit a record US$444 million along with its mobile deposits to over-the-counter transactions at a 92:8 ratio. During the period, its loan store processed almost 10,000 applications. Its corporate and investment banking segment saw US$900 million in new funding to clients while its investment banking team successfully arranged US$850 million in transactions during the year. This deal flow also included its entry to the Dominican Republic where it was able to lead a large multilateral debt syndication in the renewable energy sector for US$374 million.

FCIB’s operating expenses also increased 10 per cent to US$414.50 million due to higher staff costs, higher business taxes and strategic business and infrastructure investments. This resulted in income before taxation from continuing operations rising 53 per cent to US$289.78 million. Net income from continuing operating operations jumped 57 per cent to US$260.76 million.

After including the net income of US$9.15 million from discontinued and discontinuing operations, the consolidated net income came in at US$269.91 million. After removing the non-controlling interests related to its Bahamian operations, the net profit attributable to shareholders was US$264.06 million with earnings per share at US$0.167.

FCIB was in 16 territories at the end of the 2021 financial year (FY) ended October 31. However, it closed the Aruba sale in February 2022 before completing its Grenadian and St Vincent sales in the 2023 FY. The sale of its Grenada operations resulted in a gain of US$3.7 million while the St Vincent sale brought in a gain of US$6.2 million. FCIB’s Dominica sale did not proceed as planned due to the Eastern Caribbean Central Bank not giving final approval. As a result, FCIB closed the Dominican operations on January 31 and sold the property on June 3 for a US$1.4 million gain.

Thus, FCIB has 12 markets at the end of 2023 and should decrease to 10 key markets once the St Maarten and Curaçao sales are completed. This is mean to help it achieve its stated goal of providing banking services in a variety of formats and the best way forward to achieve long-term growth.

Barbados made up 28 per cent of FCIB’s revenues followed by The Bahamas, Cayman Islands, Eastern Caribbean, Jamaica and then Trinidad & Tobago. Its Jamaican operation grew revenue by 15 per cent to US$67.03 million (J$10.35 billion) while spending US$3.75 million in capital expenditure for the period. Its total assets grew 14 per cent to US$1.08 billion (J$166.95 billion) with total liabilities moving up 15 per cent to US$976.59 million.

FCIB’s total assets (from continuing operations) for the year are down four per cent to US$12.28 billion due to marginal declines in its financial securities and loans portfolio which stood at US$2.85 billion and US$6.63 billion, respectively. US$236.61 million is currently being held as assets held for sale related to the ongoing sale of its assets in its Curaçao to Curaçao-based Orco Bank. These assets were valued at US$302.20 million in the 2022 FY.

The sale of its St Maarten assets to Orco Bank was not recognised under held for sale due to the uncertainty regarding the completion of the sale. FCIB is currently processing the sale of its Dominican retail performing loans the National Bank of Dominica.

FCIB’s total liabilities were down seven per cent to US$10.80 million with deposits declining from US$11.43 million to US$10.53 million. US$363.87 million is currently classified as liabilities held for sale. Equity attributable to shareholders increased 17 per cent to US$1.32 billion.

FCIB’s stock price closed Tuesday at TT$7.00 on the Trinidad and Tobago Stock Exchange (TTSE) which leaves it up 28 per cent year-to-date with a market capitalisation of TT$11.04 billion. A dividend of US$0.0125 will be paid on January 18 to shareholders on record as of December 18. This dividend totals US$19.71 million and brings the total dividend for the year to US$0.0475.

Its Bahamian operations has not published its financials on the Bahamian International Securities Exchange as yet.

While currently branded as CIBC FirstCaribbean, FCIB will be renamed as CIBC Caribbean Bank Limited subject to shareholder and regulatory approval. This aligns with the adoption of the CIBC (Canadian Imperial Bank of Commerce) brand announced on October 31. The rebrand resulted in CIBC taking a CA$27 million or US$19.87 million impairment charge on the intangible asset associated with the brand.

The annual report also noted tax proposals by the Barbadian Government which stated on November 7 that it intends to implement a minimum corporate tax in accordance with the Global Anti-Base Erosion Model Rules published by the Organization for Economic Cooperation and Development (OECD). There are two pillars with pillar one looking at profit allocation rules and the second pillar related to in-scope multinational enterprises. Barbados is expected to introduce a qualified domestic minimum top-up tax in accordance with pillar two which would result in an effective tax rate of 15 per cent of net income for the group’s Barbadian entities.

“The announcement also indicated that the income of constituent entities of in-scope MNEs may not be subject to the QDMTT until an Income Inclusion Rule applies in the jurisdiction of the Ultimate Parent Entity, which for our Group is Canada. In that case, the QDMTT may not apply to the Group’s entities in Barbados until FY2025. At the time of reporting, these measures have not been tabled for enactment. The Bank expects that the effective date will be clarified when the proposed legislation is published or released for comment,” the note stated.