Capital G: 2010 Net Income $3.2 Million
Capital G Bank Limited announced today [Mar.22] net income of $3.2 million for the year ended December 31, 2010, an increase of 38% over the $2.3 million recorded for the 11 months ended December 31, 2009.
Capital G’s President & Chief Executive Officer Ian Truran said, “We are particularly pleased with this performance in the face of the recessionary pressures that continue to dominate the Bermuda economic landscape. In fact our operating earnings for 2010 were $6.0 million, an increase of $3.7 million, or 157%, over December 2009 results, after excluding accelerated depreciation on certain computer software related assets.”
While direct period over period comparisons are impacted because the Bank changed its reporting date in 2009 to December from January, with 2009 results covering only 11 months, Mr. Truran said that, “Our results in 2010 reflected the positive impact of a number of initiatives to broaden the Bank’s range of products and services including the amalgamation with Kast Investment Management Ltd. and the continued development of our business banking unit, both of which contributed positively to earnings.”
Mr. Truran continued by saying, “The amalgamation with First Bermuda Group Ltd on January 4, 2011 will further accelerate our growth and help to position Capital G as a truly full-service bank.”
In spite of a continued low interest rate environment and compressed margins, the Bank’s net interest income grew by 21% to $34.1 million as a result of continued focus on balance sheet management. Including fees and other income, which grew by $1.5 million to $11 million largely due to the addition of Kast Investment Management Ltd., total revenues reached $45.1 million for the year, compared to $37.6 million a year earlier. Total operating expenses grew to $41.1 million from $34 million while provisions for loan losses dropped to $0.8 million from the $1.3 million recorded in 2009.
Customer deposits grew $142 million, or 15%, to $1.1 billion, a record level for the Bank and total assets increased 13% to $1.2 billion. Mr. Truran said, “While we continue to grow our balance sheet, the Bank remains very strongly capitalized with a Tier 1 capital ratio of 16.88%, well in excess of regulatory minimums.”
Commenting on the quality of the Bank’s loan portfolio, Mr. Truran said, “Although impaired loans increased from $1.5 to $3.1 million, they still represent only 0.39% of our total loans. Because last year we substantially increased our provisions for loan losses, recognizing weakness in the resale market for consumer loan collateral, we have in fact been able to reduce our provision expense this year by $0.5 million. Unfortunately, while our policy has always been one of ‘the customer comes first’ and we continue to work one-on-one with customers to assist with resolving any difficult situations, we did have to foreclose on more properties this year than in 2009 as some of our borrowers struggled to cope with the effects of the recession.” The total value of foreclosed properties held by the Bank at the end of the year was $7.7 million, compared to $2.6 million at the end of 2009.
Mr. Truran also noted that the Bank had transferred some $7.3 million in asset-backed securities to its parent company at the end of the year. He said, “This further strengthens our balance sheet in anticipation of continued economic uncertainty. We have also taken steps to diversify our loan portfolio with the continued growth of our business banking activities which started last year, as well as our revenue streams following the amalgamation with Kast.”
Commenting on the amalgamation with First Bermuda Group, Mr. Truran said, “We are very pleased to welcome First Bermuda Group to the Capital G family. The amalgamation supports our strong commitment to Bermuda with both companies having a history of providing high quality financial services to local residents. Our combined operations will have over $1.4 billion in assets and we anticipate First Bermuda’s business will be a strong contributor to our bottom line in 2011 and beyond.”
Mr. Truran concluded by saying, “The Bank is well aware of the pressures that the community as a whole continues to face in the current economic environment. Capital G will continue to assist a wide range of local charitable organizations whose work supports a broad cross-section of the community, with particular emphasis in the areas of human services, youth development and education. The Bank has increased its annual ‘Giving Back’ donations fund by 60% since 2001. We are a Bermuda-focused financial institution, and we are committed to growing our ‘Giving Back’ programme in step with our evolution as a full-service bank for the Bermuda community.”
