For the first time in its history RBC Finco is not going to pay a dividend to its 4,000 plus Bahamian shareholders, after its income dropped by nearly $10 million this year.

Finance Corporation of Bahamas Limited (RBC FINCO) yesterday released its financial information reporting a net income of $4,562,631 for the fiscal year ending October 31, 2009 compared to $14,455,888 in the previous year.

Ross McDonald, chairman of RBC FINCO and Head of Caribbean banking for RBC, said: "I think the message is that in these economic times the board feels the most prudent course of action is not to pay a dividend at this stage.

"We are living in the worst economic conditions in anyone's memory and our shareholders and stakeholders should know this is a decision not taken lightly.

"But we believe it is in the best interests of the bank and of the shareholders.

"It is a prudent measure and one which is consistent with Central Bank guidelines.

"I would say that 2010 will be roughly the same as 2009, in that it will be a difficult year. RBC Finco will be concentrating on adopting the right approach, we have the best efficiency in the business, and we will strive to help our customers through.

Staff will be relieved to here that McDonald did see any job losses in 2010 despite the difficult conditions.

RBC FInco's total assets grew to $907.9 million which represents a 13.5 per cent increase from $800.1 million in 2008.

The growth in assets was attributed to continued strong demand for mortgages which has been experienced during most of the fiscal year, the company said.

Loan Loss Provisions totaled $15.1 million in 2009 and $5.3 million in 2008 - RBC Finco provisions 40 per cent of all non-performing loans or 1.3 per cent of the total portfolio which ever is the highest.

Its Tier 1 Capital Ratio stands at 18.53 per cent and its total Capital Ratio/Tier 2 stood at 19.78 percent.

Non performing loans as a percentage of the entire portfolio were 8.09 percent in 2009 and 4.09 in 2008.

In its official statement RBC Finco said: "The Bahamas over recent months as a result of the current economic environment. This weakening has triggered an increase in non-performing loans by 124.0% and the bank has simultaneously increased loan loss provisions to guard against any potential loss that may result.

"Having considered the financial results and the current levels of loan arrears in the banking system, RBC FINCO's Board of Directors have decided not to declare a dividend from the results of the fourth quarter of 2009.

"The Bank's capital ratios remain strong, being well within regulatory requirements, and its provisioning policy is consistent, conservative and robust.

"Delinquency management continues to be a priority for the bank and various initiatives have been introduced to assist customers experiencing difficulties maintaining their loans."

By Scott Armstrong - The Nassau Guardian