The profitability of local banks improved more than 87 percent during the third quarter of 2022, according to the most recent data provided by The Central Bank of The Bahamas (CBOB).
During that period, net income across the banking sector grew by $53.9 million to $155.8 million, in comparison to the same period a year prior.
“Underlying this outturn was a notable reduction in bad debt provisioning, combined with a rise in other “non-interest” earnings and commission & foreign exchange income. In particular, the net interest margin declined by $3.2 million (2.3 percent) to $136.3 million, as interest income fell by $4.2 million (2.8 percent) to $145.4 million, overshadowing the $1.0 million (9.9 percent) decrease in interest expense, to $9.1 million. However, the $1.5 million (12.1 percent) gain in income from commission and foreign exchange fees to $13.8 million, constrained the falloff in the gross earnings margin at $1.7 million (1.1 percent) to $150.1 million,” the CBOB revealed in its Quarterly Economic Review for the period ending December 2022.
“In terms of non-interest expense, banks’ operating outlays rose by 2.3 percent to $104.6 million. Specifically, non-staff related operating costs— inclusive of professional and rental expenses— grew by $3.7 million (6.6 percent) to $60.5 million.
“However, staff-related costs declined by $0.8 million (1.9 percent) to $41.6 million, and occupancy costs, by $0.6 million (18.3 percent) to $2.5 million. Further, banks’ other net earnings expanded to $70.3 million from $12.3 million in the previous year, as provisions for bad debt declined. Other non-interest income also moved higher by $8.0 million (17.0 percent) to $55.3 million. In a modest offset, depreciation costs edged up by $0.6 million (11.5 percent) to $6.0 million.”
The Central Bank said because of this, movements in banks’ profitability ratios were also dominated by reduced bad debt costs.
