Keith Collister, Business Writer

While Pan Caribbean's six-month profits grew only one per cent to $546 million for the first quarter of this year when compared with last year, its balance sheet continues to show some growth, rising $5 billion in 2007 to nearly $50 billion.

The bank's loan portfolio was also up $1.5 billion in 2007, which CEO, Donovan Perkins, said reflected "growth in high-quality credit assets", and Pan Caribbean Financial Services (PCFS) remains strongly capitalised.

Income Statement

Perkins described the quarter as "pretty decent", with net interest income benefiting from balance sheet growth. He said that "interest margins continued to tighten as it has for most of the industry. "

Head of Pan Caribbean's Stocks and Securities Ltd., Mark Croskery, said, "This set of results is the best set of results from the 'investment house' market."

He noted that "when looking at them originally, one is disappointed with the continuous lack of growth, as the company has been unable to get over the 'hurdle' of 50 cents per quarter".

But, according to Croskery, "PCFS results are strong in comparison (to its competitiors), but 'fair' stands alone."

The downturn in the stock market clearly negatively impacted both brokerage income as well as asset management fees. Perkins stated, "We had to work hard to identify and realise trading opportunities in fixed income as market conditions were somewhat uncooperative."

Non-Interest Costs

Expenses rose on the back of increased salaries. Unsurprisingly, some costs related to the PCFS's commercial banking initiative also increased. Perkins believes these "will accelerate during the second half of the year".

Commenting further on Pan Caribbean's results, Perkins stated, "Overall, I am reasonably happy. The investment banking sector has had a tough 18 months, but we have continued to grow and build our franchise, albeit at a slower pace than in the past. We are excited about the commercial bank prospects."

Importantly, the commercial banking sector has outperformed the investment banking sector in recent times with its lower cost of funds, better fee-related opportunities and the expansion of retail loans.

Perkins added, "Our commercial bank will take a little longer than expected to launch because we want to ensure that we deliver something special to the market in 2008"

Croskery said he was anticipating "further synergies and growth being derived from commercial bank and lower cost of funds".

keithcollister@cwjamaica.com