PanCaribbean profits flattened by new bank

Published: Friday October 24, 2008

Brought down by disappointing profits in the third quarter, a bigger wage bill and other expenses year to date, Pan Caribbean Financial Services recorded flat profits of $901 million or earnings per share of $1.64, in its newly released nine-month earnings report.

Pan Caribbean at the end of September had paid out half a billion dollars in salary - up 35 per cent year-on-year - its biggest spend inside total expenses of $851 million, which were up 27 per cent.

The expanded cost of running PanCaribbean undercut the 13 per cent improvement in revenue which rose from $4.5 billion to $5.1 billion, and sliced four million or half a point off net profits.

Pan Caribbean said its staff cost rose because of additional personnel taken on for its new commercial banking operations launched in July, but also included adjustments for inflation.

"Our commercial bank has completed its first full quarter," said chairman Richard Byles and Chief Executive Donovan Perkins jointly in a statement appended to the accounts.

"This investment will enhance the future profitability of the group and give us the capability to better compete entering 2009."

Smallest commercial bank

PanCaribbean Bank Limited is Jamaica's seventh and smallest commercial bank with assets below $10 billion.

The group's net interest income, a measure of the core strength of brokerages and other financial sector firms, was a near 17 per cent improved at $1.45 billion, "influenced by balance sheet growth," the company said.

Balance sheet assets grew by $8 billion to $58 billion because of an expanded securities portfolio, but the company also saw a depletion in the value of its bonds which forced a write-down of $273 million. Shareholder equity was disturbed as a result but not substantially, falling to $7.4 billion from $7.5 billion within the nine-month period.

Capital to assets ratio

Pan Caribbean also stressed its capital to assets ratio, saying that at 15.6 per cent, the company was well capitalised.

"Pan Caribbean's balance sheet consists of cash equivalents, high-quality loans, Bank of Jamaica instruments and Government of Jamaica bonds," said its statement.

"Our capital to assets ratio at 15.6 per cent is amongst the highest not just in Jamaica, but within the Caribbean region. In addition to being well capitalised, we maintain conservative levels of liquidity and our franchise is supported by strong and diversified business lines that protect our profitability."

The company said if the global downturn descended into recession, it would impact equity and bond markets, but sought to assure shareholders that its team was capable of steering investors, depositors and borrowers through the period.


Source: Jamaica Gleaner
http://www.jamaica-gleaner.com/gleaner/20081024/business/business7.html