Good times for Pan Caribbean - JamaicaObserver.com

Saturday, November 21, 2009 6:38 AM

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Good times for Pan Caribbean

Profits jump by 23 per cent

By Al Edwards

Friday, November 06, 2009

Pan Caribbean Financial Services (PCFS) under the stewardship of its President and CEO Donovan Perkins put in an admirable performance for the nine-month period ended September 30, 2009 against the backdrop of a global economy in recession and a contracting local market where capital is at an all-time premium.

President and CEO of Pan Caribbean Financial Services Donovan Perkins

For the period under review, gross operating revenues came in at J$6.9 billion compared to $5 billion for the same period last year. Net Interest Income of $1.93 per cent spelt a 33 per cent increase on the $1.45 billion registered for the corresponding period in 2008. PCFS did well from interest income from both loans and securities with loans netting $835 million, a notable increase on the $588.8 million booked last year. Securities were good to the group, bringing in $5.4 billion as opposed to $3.8 billion for the same period last year. All in all, improved interest margins and a 17 per cent growth in earning assets to $62.6 billion at September 2009, contributed to this performance.

Net Interest income moved to $1.9 billion from $1.4 billion for the same nine-month period last year. The New Kingston-headquartered institution saw a slight decline in fee and commission income which came in at $215.5 million, $29 million less than last year. It must be noted here that fees and commissions are generally down across the sector. Net trading income was positive, gaining on last year's figure of $208 million and coming in at $261 million.

Non-interest income grew by 14 per cent to $672 million as against $587 million last year, mainly due to increases in fixed income trading gains and improved foreign exchange trading and translation gains. PCFS notes that last year's non-interest income included a $58 million capital gain realised on the disposal of its 25 per cent holding in Manufacturers Credit and Information Services (MCIS).

The group registered a net profit of $1.1 billion, for the nine-month period ended September 30, 2009, a 23 per cent increase on the $900 million booked for the prior year. Nine-month profit before tax grew 25 per cent to $1.48 billion, comparing favourably with last year's $1.1 billion. Earnings Per Share (EPS) went past the $2 mark at $2.03. Last year for the same period, PCFS recorded an EPS of $1.64. Total assets increased by five per cent, standing at $67.2 billion, an increase of $4.6 billion on December 2008's $63.8 billion. PCFS's interest-bearing securities portfolio brought in $52.8 billion while loans and leases brought in $9.8 billion, a 16 per cent increase on last year's figure.

Commercial bank spells added expenses

Pan Caribbean has ventured into the commercial banking arena which has brought on additional operating expenses largely associated with hiring additional staff. Its expenses here came to $1.1 billion, an increase of 31 per cent on the $852 million registered last year. For the period under review, Personnel Costs increased by 15 per cent. There were a number of costs associated with establishing the new bank and introducing new products and services. Revenues generated by the new commercial bank will no doubt offset these expenses next year.

Speaking with Caribbean Business Report yesterday, PCFS' president and CEO Donovan Perkins said: " I think we had pretty decent results for the nine-month period and showed good momentum going forward into the year. For the first quarter we reported profits of $349 million, for the second quarter $373 million and this quarter was $389 million.

"Our focus for 2009 has been preserving the capital of the institution and maintaining our liquidity in a time of uncertainty. We took the decision at the end of last year to preserve our liquidity while at the same time building the business. Our private banking activities and institutional clients have continued to grow. The same goes for our retail clients.

"Where we have seen a downturn - and this is not surprising - is in our brokerage operations where the market has retreated. Even though we still have the best unit trust product, subscriptions have been weak. One of the hallmarks of the Group is the focus on customer service and finding ways to provide better value."

Perkins added that PCFS will be paying particular attention to loan quality even though its ratios are very good. Now with its commercial banking arm, he sees that PCFS will be able to compete aggressively in the market by adding accounts. In this respect the bank is pretty much in line with the targets it set itself.

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