The chairman of the largest Bahamian bank delivered a power-packed report to shareholders yesterday, mixing positive news of an upbeat start to this fiscal year with a serious message: 2013 will not be about growth, but about stability and strength.
"We will forego growth in favor of prudence and that will keep Commonwealth Bank strong, stable and profitable, the number one Bahamian bank in the nation," declared William B. Sands Jr., addressing hundreds who filled the large conference room at SuperClubs Breezes for the all-Bahamian-owned and operated bank's annual general meeting (AGM). With net income of $36 million in fiscal 2012 despite loan write-offs of $44 million, and little hope for major economic recovery until Baha Mar opens in late 2014, Sands said the bank would continue on its conservative path.
"In 2013, the bank will maintain its focus on the consumer market which has served us well," the bank's CFO Patrick McFall said. "Recognizing the challenges of the day, we also intend to be led by quality over quantity. This means we will forego growth over prudence believing that this will benefit the bank and consequently benefit you our shareholders in the long term."
President Ian Jennings echoed and reinforced the conservative path, outlining areas including online banking where the bank with branches in Nassau, Grand Bahama and Abaco would look for modest growth. It also plans to introduce mobile banking. The single physical expansion, Jennings said, would be the Oakes Field branch which, he noted, had outgrown the capacity needed to serve the public. That branch is temporarily closed, the victim of fire less than one week later during the height of a major electrical and rainstorm May 21. Work on the branch, initially scheduled for the fourth quarter, is now expected to be advanced to an earlier date. Meantime, the bank has relocated its Oakes Field branch operations to the Burns House building on John F. Kennedy Drive and Bethel Avenue, a move it made in record time, some eight days after fire forced the closure of the Oakes Field branch.
Despite references to the five-year-long recession, the bank paid $28.5 million in shareholder dividends in 2012, maintaining its policy of sharing 65 percent of income with the more than 4,000 shareholders from every walk of life. And on the day of the AGM, Commonwealth Bank's share price hit the highest price traded this year - $6.79.
"The highest traded shares of BISX reflects the desirability of the shares even in uncertain times," said Jennings, crediting effective management and "absolute dedication to excellence in service by all the management and staff of Commonwealth Bank."
Along with additional scrutiny that goes into every lending transaction now, Jennings and McFall said tighter controls had netted higher efficiency ratios. Those recession-bred refinements, however, will not alter the formula for success identified by Commonwealth Bank, the widespread, broad-based consumer loan with the average loan in the $16,000 range to avoid catastrophic loss in a single default.
The bank also took preemptive action, passing a resolution to amend the rights of $50 million of authorized by unissued preference share capital so they would be well-positioned to comply with the international capital accord known as Basel III. The president said the bank wanted to address the issue in the next two to three years rather than wait until 2023 when the accord would be fully implemented.
For an annual general meeting in a challenging economy, it could go on record as one of the liveliest and most enthusiastic.
After reporting the full extent of mixed news culminating in a better than expected first quarter with more than $12 million in profit, the president took a question from a member of the audience that stunned everyone. "You all did such a great job I think you should give yourselves more money and then we can all get more dividends, too," she said.
Click here to read more at The Nassau Guardian
