By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bank of The Bahamas top executive yesterday asserted it is moving beyond the bail-outs that “will forever haunt” the institution with predictions it will grow this year’s forecast $7m profit by a further 20 percent in 2023.

Kenrick Brathwaite, the BISX-listed institution’s managing director, told Tribune Business it is now “on a good wicket” and close to being “comfortable” that it can generate sustained profitability on an annual basis after generating $5.806m in net income during the three months to end-March 2022.

That represents a more-than $7.4m reversal from the $1.614m net loss incurred in the same quarter just 12 months prior, and he voiced optimism that by the time Bank of The Bahamas’ 2025 financial year begins in July 2024 it will be poised “to compete on a level playing field with any bank in the country”.

Based on the institution’s nine-month performance, with the third quarter having wiped out a minor first-half loss to leave profits at $5.637m, Mr Brathwaite predicted that Bank of the Bahamas - which is 82.6 percent majority-owned by the Government via the National Insurance Board (NIB) and Public Treasury - will generate full-year profits that finish “north of $7m”.

And, given that the Central Bank and International Monetary Fund (IMF) are projecting 4 percent economic growth for The Bahamas next year, combined with a continued tourism recovery, he revealed that the publicly-traded bank is targeting a further 20 percent bottom line expansion during the financial year that closes at end-June 2023.

Hitting those two goals will require Bank of The Bahamas to produce a near-$1.4m net profit during the three months to end-June 2022, when its financial year closes. And it will then need to generate $8.4m in net profit over the following 12 months of its 2023 financial year, representing another $1.4m jump.

However, while such profitability may pale against the $134.533m accumulated deficit remaining on Bank of The Bahamas’ books due to the sustained losses incurred between 2014 and 2018, which required two taxpayer bail-outs and a rights offering worth a combined $300m-plus to stabilise it, Mr Brathwaite said there were sufficient signs to suggest it is close to moving on from a troubled recent past.

“We are progressing. I think we are getting better. We’re reaching a position of more sustainability. We’re creating additional revenue streams that are helping the cause,” he told this newspaper, pointing to non-interest revenue sources such as fees and commissions earned from the provision of merchant services, Automated Teller Machine (ATM) services and fees levied on cash deposits.

Using a cricket analogy, Mr Brathwaite said: “We are on a good wicket. We’re going to be fine as long as we’re doing the things we’re doing now. We’re getting through to a position where we can be comfortable we’re not dipping into a loss one year, and are profitable next year. We can be confident we’ll make a profit every year.

“I think we’re getting to that position. We don’t want to be up and down, making a profit and then making a loss. COVID pushed us into a loss, but other than that we have been turning a profit, which is all we can hope for.” Mr Brathwaite said Bank of the Bahamas was also moving to strengthen its physical presence by expanding its branch network, with ambitions to open its new location close to JFK Drive’s six-legged roundabout by 2022’s calendar year-end.

“We’re behind the other banks in terms of physical presence,” he told Tribune Business. “That’s one of the things we’re looking at in our strategic plan - to improve the bank’s image. We’ve spent quite a bit of money, millions, renovating the Freeport branch, and with the new branch in Nassau that will go in the direction we need to go in to make sure everyone knows we’re in this market and here to stay.

“We still need to ensure the image we portray is something acceptable to us. The other banks may not have that challenge, but based on our history we have to do a little more.” Mr Brathwaite confirmed he was referring to Bank of The Bahamas’ rescue in the latter half of the last decade by its majority shareholder, the taxpayer, which ensured its survival after being almost overwhelmed by a toxic commercial loan portfolio featuring some politically-connected borrowers.

“That is definitely behind us,” he asserted of the bail-outs. “Those poor decisions we made in the past will forever haunt us, but as long as we continue to build we will get beyond that. We still have a lot of room for growth. Once you get on the growth track as a bank, you see your revenue streams increase on an annual basis so you can sustain profitability over the long-term.

“We’re building the bank for the long-term, not the short-term. We’re not going anywhere. At the end of our three-year strategic plan we expect to compete with any bank. By the end of the 2024 financial year, going into 2025, we should be in a position where we are competing on a level playing field with any bank in this country. We’re strengthening multiple things to enable us to compete on a level playing field.”

Asked about Bank of The Bahamas’ profit targets for the 2022 full-year, Mr Brathwaite replied: “I’m going to be optimistic and think we should end up north of $7m for the year, which is a pretty good number for us and will exceed our projections for the year, so that will be a good number for us. Our projections were kind of conservative. It will have surpassed our projections for the year.”

As for 2023, he affirmed: “Based on what we’re looking at now, the Central Bank is projecting increased overall GDP growth for next year. We’re projecting the tourism industry will continue to move upwards as well unless we have an exceptional outbreak with respect to the pandemic, so our projections for next year are looking at 20 percent growth.

“We’re factoring into that the hope we will be able to go back to commercial lending to diversify our lending streams. You can’t be relying on one aspect of lending, or interest income, non-interest income, fees and commissions. The Central Bank will be here by the end of the financial year to do its their review, and we’re optimistic we will have some good news from that. We expect some good things. This is a good time for Bank of The Bahamas.”

The Central Bank has blocked Bank of The Bahamas from commercial lending since the latter was rescued given that this was largely the area that got it into trouble in the first place. The BISX-listed institution has since had to largely rely on consumer loans for credit book growth, with its mortgage portfolio also shrinking.

Mr Brathwaite conceded that Bank of The Bahamas still needs to “turn the corner” and clean-up its remaining non-performing loan portfolio, which is well in excess of the commercial banking industry average at 18.69 percent or $69.494m of its existing $371.826m net credit book.

While he was not with Bank of The Bahamas when its survival was in question, the Government in the upcoming fiscal year needs to redeem the $167.7m “promissory note” that it injected into the institution’s balance sheet in 2017 and replace this with cash. At end-March 2022, the bank was owed some $2.2m in accrued interest payable on the note.