Bank of The Bahamas' performance to the end of November 2017 improved significantly over the previous year with the Bank making a profit of $1.29 million compared with a loss of $6.18 million for the same period in FY2017 according to the Bank's Chairman Mr. Wayne Aranha. Mr. Aranha provided an update on the Bank's performance at its annual general meeting which was held at the British Colonial Hilton hotel on December 29, 2017.

"The Bank has incurred approximately $0.63 million in costs for severance and redundancy payments relating to staff reductions that took effect in November. The reductions will have a favourable effect on staff costs for future periods. The closure of the Bank’s branch in Eight Mile Rock and the pending closure of the Exuma Branch (effective December 31st, 2017) will also favorably affect future operating costs," Mr. Aranha said. However, he noted that cutting costs alone will not suffice as the ultimate success of the Bank is dependent on healthy growth in revenues.

"Targets have been set to achieve moderate growth over the next year, but so far, competitive pressures and continued regulatory restrictions on credit extension have contributed to the targets not being achieved," Mr. Aranha said.

The Chairman invited shareholders to take advantage of BOB's rates on savings and term deposits, which he said are more attractive than those of the competition. He noted that, in some instances, interest rates on savings at competitor banks have decreased to zero percent.

With regard to the bank's capitalization, Mr. Aranha said the terms of the Resolve 2 transaction which involves the purchase of $167 million in BOB impaired commercial loans by Resolve had been finalized by August 31st. The first tranche was effective 31st August 2017, the second tranche effective 18th September 2017 and the third tranche completed on 14th November 2017. As a result he said the Bank's key ratios have improved significantly.

Under the Resolve 2 agreement an unsecured promissory note for $167.7 was received by the bank for these loans and was recognized as an asset. As a part of the transaction, the Bank received an irrevocable Letter of Support from the Government which pledged the Government’s support of Resolve to enable it to satisfy its obligations under the Notes and confirms that, in the event of default by Resolve, the Bank can seek to recover outstanding balances from the Government. The Note, which is repayable on 31st August 2022, bears interest at the fixed rate of 3.5% per annum, payable semi-annually on the 28th day of February and the 31st day of August, commencing in 2018.

Mr. Aranha also noted that the Government opted to redeem the entire $100 million of the promissory notes from the first Resolve transaction between August 2017 and May 2018.

On the subject of dividends Mr. Aranha said the bank will pay $6.4 million in January 2018 on series ‘D’ and ‘E’ 8.00%[1] Perpetual Cumulative Preferred Shares to avoid default of the terms and conditions governing the issues. He said payment of dividends on preference shares would rank ahead of common shares and dividends would not be paid on common shares until the bank has been profitable for four successive quarters.

Looking ahead to the future Mr. Aranha said the Bank is focused on critical areas including stronger corporate governance structure, improved operational efficiencies, revision of credit policies and procedures, regulatory compliance, cost control and moderate growth.

During the meeting four directors were re-elected to the bank's board including Wayne Aranha, Ruth Bowe-Darville, Kirk Antoni and Timothy Brown.

PHOTO CAPTION: Pictured from left to right: Wayne Aranha, Chairman, BOB; Renee Davis, Managing Director, BOB; Michelle Pindling-Sands, Partner, Graham Thompson.