By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A BISX-listed bank is targeting a return to $20m profits for full-year 2025 despite falling narrowly short of its 2024 target after the traditional Christmas borrowing surge failed to materialise.

Gowon Bowe, Fidelity Bank (Bahamas) chief executive, told Tribune Business that while the 2024 fourth quarter failed to meet expectations the lender is optimistic it can beat global banking industry standards by generating return on equity (ROE) of between 20-25 percent for the 12 months to end-December 2025.

While the anticipated pre-Christmas credit rush failed to occur, he conceded this “may be a good thing” if Bahamians are becoming more prudent about over-extending themselves. And, with qualified new borrowers still in relatively short supply, the Fidelity chief said he believes a significant amount of 2025’s growth will come from “rehabilitated” clients whose previously written-off loans are brought back into good standing.

Disclosing that Fidelity Bank (Bahamas) recovered $4m of such loans in 2024, Mr Bowe also revealed to this newspaper that “competition” concerns have arisen over the Government’s recent policy to encourage new civil service hires to “bank with a particular bank”.

While not naming the rival to whom the Government is directing new recruits, he argued that as the largest employer in The Bahamas it “has an obligation to promote competition” and consumer/personal choice as well as ensuring efficiency with its payment systems.

Speaking after the BISX-listed institution generated unaudited profits of $17.971m for the 2024 full-year, just $29,000 short of its $18m target, Mr Bowe said: “I think we were quite pleased. We thought originally we would do a bit better based on where we were in the third quarter but the expectation of a more buoyant fourth quarter did not materialise.

“The traditional uptick in holiday season borrowing did not materialise. From a social point of view it may be a good thing that people didn’t over-extend themselves but, from a banking perspective, it didn’t really help. It didn’t contribute to profits but, for social value and social progress, hopefully that’s an indication of people being a bit more diligent in spending around the holidays.”

Mr Bowe said Fidelity Bank (Bahamas) pre-Christmas experience, with $3.813m in net income generated during the final three months of 2024, appeared to match feedback from Bahamian retailers who - while enjoying a profitable holiday season - were not generally overwhelmed by consumer spending or foot traffic.

While enjoying a $4.211m, or 30.4 percent, year-over-year profits rise compared to 2023’s $13.78m bottom line, Fidelity Bank (Bahamas) achieved the improvement despite a net loan portfolio that declined by just over $1m to $358.01m at end-December 2024. Much of the profit growth was driven by a $3.124m surge in fee and commission income generated by its merchant services and card business.

Mr Bowe, noting that new lending opportunities will likely continue to be limited in 2025, said: “If the Central Bank had statistics showing new borrowing versus how much is rehabilitation of delinquent loans that would be a very telling story. Particularly in terms of our experience, we’re not seeing new borrowing.” That, he added, applies equally to public sector as well as private sector workers.

“Government doesn’t have a freeze, but is being more diligent in hiring,” the Fidelity chief told Tribune Business. “The Government has also taken a policy position where they are not as accommodating with salary deductions for new employees.”

Such positions have been adopted within the past year, Mr Bowe revealed, adding: “They are encouraging new employees to bank with a particular bank so, for other banks, they are unable to obtain salary deductions and those people are unable to initially bank with their chosen bank.

“That’s going to put restrictions on growth coming from new employees in the Government sector. That’s a policy government needs to consider as competition. It has a role as an employer, and can make decisions on payment efficiency and effectiveness, but as the largest employer in the country it has an obligation to promote competition.

“When it makes an internal decision as to who employees bank with or borrow from, that’s not competitive behaviour but is probably unintentional because it’s not considering engaging ownership participation and capital markets participation.”

The practice of directing workers to open accounts with a certain bank has emerged just as the Davis administration has begun promoting plans to complete and enact antitrust legislation for The Bahamas, having repeatedly argued that a lack of competition in certain industries - which it has yet to identify - has contributed to high prices, inflation and the country’s cost of living woes.

“We equally are not seeing a large number of new employees in the private sector,” Mr Bowe said. “While there may be the lowest unemployment in several years, when we look at the actual number of persons who were [employed] in the workforce in 2024 it’s less than 2019.” The actual size of the workforce has decreased since Hurricane Dorian and COVID-19.

But, while lending opportunities may be restricted, the Fidelity Bank (Bahamas) chief said this is being more than offset by the continued expansion of its merchant services and card business. “We certainly have as our baseline $20m,” Mr Bowe replied, when asked about the bank’s profit targets for 2025.

“And then return on equity, we’re comfortable at 20-25 percent. Return on equity, while the industry standard for banking is 15-20 percent, our target is 20-25 percent. It’s our personal target for Fidelity. We know the industry is at 15-20 percent, but we believe based on our understanding of the marketplace and the opportunities we see ahead, we believe 20-25 percent is achievable.

“All of the initiatives in 2024 that did work together for positive results, it’s about pushing those forward and having greater success,” he added. “Last year we ended up with recovering defaulted loans worth $4m. It was a little bit below what we were striving for, $4.5m.

“We have $90m in loans that were written-off over many years. The efforts to pursue those have proven fruitful, and have been a major contributor to our having success. We’re not looking for one-year wonders that will not continue. There are not many new borrowers but enough delinquent borrowers to keep us busy.

“They represent loan book growth because, if we can rehabilitate them and make sure they are consistent with their repayments, those are new loans. We also have historical data on them, so we are a little bit ahead on those persons than we are with new borrowers.”