George THE NEW chairman of CIBC Jamaica Limited, Michael Mansoor who is also president and chief executive officer of CIBC West Indies Holdings Limited yesterday said he was pleasantly surprised by the relatively low level of bad debt accumulated by CIBC Jamaica Limited.
He was addressing CIBC's Annual General Meeting (AGM) held yesterday at the Courtleigh Hotel New Kingston.
"With all that has happened to the financial sector in Jamaica, I'm really surprised by our bad debt performance... it could have been a lot worse", Mr. Mansoor told Wednesday Business in an interview Tuesday, following the bank's AGM which saw Mr. Emil George retiring as chairman after 17 years at the helm. At the re-election of directors, Raymond Campbell and Cecile Watson, vice president of commercial clients and corporate affairs and director of branch banking respectively, were reappointed.
CIBC Jamaica Limited, which provided J$116.2 million for loan losses last financial year ended October, 2000, wrote off $187.6 million in bad loans. Both the provision and actual write-of in 2000 were the largest in four years. As at October 31, 2000, non-performing loans on the company's books had increased to $348.8 million from $340.4 million in 1999. But the slight increase in the arrears rate from 6.10 per cent in 1999 to 6.4 per cent in 2000 is not considered serious, coming from 7.2 per cent in 1997. Mr. Mansoor's pointed to the fall out in the financial sector which took place some four years, and which saw banks chalking-up double-digit arrears rates.
"In fact, 2000 proved to be another successful year for our bank", says out-going chairman Mr. Emil George, citing an increase of 105 per cent coming from $111.3 million in 1999 in net profits to $228.8 million, one of the best performances among Jamaica's commercial banks. The audited financial accounts of the company credited that performance to foreign exchange gains, improved performance from some loans, and savings resulting from the 1999 redundancy exercise.
In addition, total assets for 2000 grew by 16 per cent coming from $13.7 billion in 1999 to nearly $15.9 billion last year, while total deposits and loans stood at $13.9 billion and $5.4 billion respectively. This represents increases of 19 per cent and 5.8 per cent over the 1999 financial year. Despite depreciation costs and increased bad loan provision, shareholder's equity increased by 18.7 per cent to $1.2 billion
"This performance", Mr. George told shareholders, "came in the face of a changing marketplace that saw the emergence of new players, increasingly stringent regulations, and more sophisticated customer demands", adding, "we took significant steps to reaffirm our position as an institution which is able to combine its global connections with strong, local application".
The out-going chairman cited several reasons for the good performance posted in 2000. Among those were the reorganisation of its line of business in order to sharpen its focus on customer needs, the appointment of Raymond Campbell and Cecile Watson in their present position, the assignment of relationship managers to each section as a group, and the appointment of three committees - Risk, Audit, and Human Resources. The decision was also taken to improve the governance of the pension fund, by creating a board of trustees that incudes non-executive directors and members of the Fund. This strategy resulted in a reversal of the position of the Fund from a deficit of $91.6 million in 1996 to a surplus of $57 million in 1999. The financial report assured that this would be reflected in reduced cost to the bank's customers and improved benefits to staff.
However, the AGM, which was held at Courtley Hotel was not smooth sailing for the chairman, who at one time became visibly irritated by questions and remarks from shareholder Mr. Clifford Burrows. Mr. Burrows was concerned that only one director of the bank, Peter McConnell owned shares and that whilst management fees was up by 58 per cent, dividends rose by just 15 per cent. He expressed concern that the bank's geographical expansion did not include Jamaica and suggested that pensioners get their retirement benefits at age 65 years. He however, commended the company for the current state of the Fund.
An interesting observation made by Mr. Burrows met with some support. This related to the classification of the Jamaica Central Securities(JCSD) Depository Limited as a shareholder, even though it could not vote. But some experts believe that it is sufficient that JCSD provide proxies for the many shareholders which it represents.
