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Fidelity declares dividend as profits spike

After nearly two years without dividends, shareholders of Fidelity Bank (Bahamas) Ltd. (FBB) can look forward to an estimated $0.07 per share next week following the bank posting $3.18 million in net income for first three quarters of 2011.

The bank recently announced that all shareholders of record as of Nov. 28, 2011 would receive the dividend, payable Dec. 5, 2011.

Representing an over 665 percent improvement on last year’s third quarter results, the bank’s Chief Executive Anwer J. Sunderji told Guardian Business in an earlier interview that FBB has been adjusting the composition of the loans in its portfolio.  The bank has been focusing on the higher-risk, higher yield consumer loans and reducing the amount of mortgages on its books.

“We have primarily been a mortgage bank, but we are increasing our footprint in the area of higher yielding loans, so we’re going up the yield curve a bit,” Sunderji told Guardian Business earlier this month.

Mortgages traditionally accounted for about 90 percent of the bank’s loan portfolio, but Sunderji said that has come down into the 70 percent range, with more of the loan book now in higher yielding facilities.

He forecast that net income would exceed $4 million by the bank’s Dec. 31 fiscal year-end.

The higher yielding portfolio, and its 14 percent growth together helped produce a 27 percent increase in the top line interest income to the Sept. 30, 2011 third quarter end at $19.29 million, up from $15.18 million year-on-year.  Despite the spike, interest expense only grew 2.6 percent for the nine months, resulting in a 61 percent increase in net interest income to $10.21 million and setting the income statement up for strong growth in the bottom line.

The riskier loan classes FBB is pursuing may have prompted its 67 percent increase in provisions for loan losses – that line expanding $459.2K to $1.144 million by Sept. 30.  It accounted for about a third of the 15 percent expansion in total expenses.

But it was salaries and employee benefits that kicked in the most to the growth of expenses, that line ballooning 20.8 percent to $4.91 million.  CFAL’s senior research analyst, Jamaal Stubbs, told Guardian Business the expansion of FBB’s collections department was likely behind much of that growth.

In a media release from Fidelity at the release of its third quarter results, Sunderji noted that non-performing loans were up to 8.4 percent of the loan book.  With loans and advances to customers at $242.7 million, that’s about $20 million in the non-performing classification.

The CEO said he would still like to see better performance in delinquent loans, and that the bank remained focused on reducing them.

At Sept. 30, Fidelity’s total assets were $326.65 million, with total liabilities at $288.75 million.  Deposits from customers grew 18.7 percent year-on-year to $261.95 million. Total equity came in at $37.9 million.

Return on shareholder equity was 11.7 percent for the first three quarters, with return on assets coming in at 1.4 percent.

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