While fiscal year 2011 is now behind it, investors in RBC FINCO (FIN) await the annual report for the final details on the primarily mortgage-based bank's financial performance in a still struggling economic environment.  FIN's managing director, Tanya McCartney, told Guardian Business yesterday the primarily mortgage based operation is hoping non-performing loans (NPLs) don't escalate over the new fiscal year.

"Well the 2012 fiscal year just started and so we have about 11 months to go ... at a minimum though, we would certainly wish for the NPLs to remain flat.  "We have seen some positively decreasing trends during 2011 and are cautiously optimistic on modest reductions throughout 2012," McCartney told Guardian Business.

By the end of the third quarter, FIN had provisions to non-performing loans of around 25.77 percent, according to McCartney, a level she said was "more in line and comparable with the levels of other banks in our market".  FIN was able to post strong third quarter growth by the July 31 period end, net earnings for the first nine months up 53 percent to $15.53 million year-on-year.

FIN is essentially the mortgage arm of RBC Royal Bank in The Bahamas, taking on the mortgage sales in New Providence and Grand Bahama.  Left particularly susceptible to the mortgage market, as the economy tightened, non-performing loans and delinquencies expanded for the bank.

FIN has been managing delinquencies through greater engagement of clients who, historically, have met their commitments though they may now be challenged to do so, McCartney said.   Those relationships are sought out for restructuring.  The bank has also been more focused on credit quality, she said, extending fewer exceptions to the credit policy.  Collections have also been outsourced to RBC Royal Bank, with its greater resources in that area, she said.

Moving into the next calendar year the bank will also aim to grow its business through better leverage of existing partnerships, including those with RBC Royal Bank, RBC Wealth Management, and Royal Fidelity, according to McCartney.  The bank will also be looking to differentiate itself based on its service levels, according to the managing director.

Both at RBC and FIN, its leaders will have their fingers more closely on the pulse of the market.
At FIN, one manifestation of this is that the managing director will have direct reporting lines and responsibilities for branch operations, according to McCartney.  Many FIN shareholders hungry since its last dividend payout at the beginning of its 2010 fiscal year will want to know when they can expect to see another dividend. The bank's board meets every quarter to assess performance and determine if a dividend will be paid, taking some key considerations into account.

"Particular attention is paid to the level of non-performing loans, McCartney said.  "Ideally, we do not want to "start and stop" payment of dividends erratically.   We would like to see a consistent trend of stabilization and decline in non performing loans.  This is what we look at each quarter end."

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