The Canadian Imperial Bank of Commerce (CIBC), the parent of FirstCaribbean Bank may have taken a hit on its profits in the second quarter but it’s not leaving Barbados and its neighbours.
That was the message which top CIBC executives delivered to analysts, journalists and others during a recent conference call in Canada as they announced that second quarter profits had dropped to CAN$306 million (BDS$560m) or 73 cents per share, all due to losses from its FirstCaribbean subsidiary which has a significant banking presence in Barbados and 16 other Caribbean countries.
“The business has historically been a good investment for us,” said Richard Nesbitt, CIBC’s chief operating officer. “What you’re seeing here is we continue to believe we can get there. Unfortunately, it’s going to take us longer because the economic environment has not started to improve like we felt it would.”
The bank’s second quarter earnings fell from CAN$862 million or CAN$2.09 per share in the same quarter of 2013. CIBC announced earlier in May that it would take a CAN$420 million, non-cash goodwill write down because of First Caribbean’s performance and CAN$123 million of after-tax loan losses. However, the bank, one of North America’s largest, raised its quarterly dividend by two cents to CAN$1 per common share.
CIBC’s performance surpassed the expectations of analysts in and out of Canada.
The economies of Caribbean countries, Barbados included, have been hard hit by a combination of mediocre tourism industry earnings; high debt; expanding fiscal deficits and anaemic economic growth.
Several analysts in Canada had asked if CIBC was going to pull out of the Caribbean but the reaction during the conference call indicated the answer was no. (TB)
