Most of the Caribbean economies expanded their gross domestic product (GDP) in 2014, averaging at 1.3%, according to estimates by the Caribbean Development Bank. Although this is down on 2013’s 1.7% average, sustained growth in the region is good news after the catastrophic economic downturn saw the regional GDP shrink by 3.6% in 2009. The prospects for 2015 are already looking positive, too.
The strongest growth rates in 2014 were witnessed in the most tourism-dependent economies in the region. Saint Kitts and Nevis and the Turks and Caicos Islands, for example, experienced GDP growth of 4.2% and 4%, respectively, thanks largely to their tourism industries.
On the other hand, oil producer Trinidad and Tobago, which accounts for nearly one-third of the Caribbean’s total GDP, slowed to a modest GDP growth of 0.5% in 2014, mainly because of the significant drop in oil prices. Its banking sector has unsurprisingly recorded lower profitability, with aggregate pre-tax profits down 27.42% on the previous year to $352m.
Trinidad and Tobago leads
Trinidad and Tobago’s banks, however, continue to dominate the Caribbean ranking by Tier 1 capital. Out of the top 10 of the regional list, five names are based in Port of Spain, Trinidad’s capital. The leader, RBC Financial Caribbean, recorded $2.6bn of Tier 1 capital last year, more than twice the size of second placed FirstCaribbean International Bank, which is based in Barbados. Trinidad’s Republic Bank, First Citizens and Scotiabank are in fourth, sixth and eighth positions, respectively.
None of the Trinidadian names, however, feature in the most improved table. This is led by Finabank, a small Surinamese lender that expanded its Tier 1 capital by 227.28%. Finabank is followed by De Surinaamsche Bank, also of Suriname, with 37.4% and Commonwealth Bank, of the Bahamas, with 22.12%.
Overall, aggregate pre-tax profits across the region were lower than previously recorded – a decrease of 23.58% to $1.03bn. Some strong improvements were registered by a number of banks, however. The best performer among all lenders was Jamaica’s JMMB Merchant Bank, which closed 2014 with pre-tax profits more than five times higher than its previous figure. East Caribbean Financial Holding in Saint Lucia also did well, with a 211.59% rise in pre-tax profits, followed by Scotiabank St Lucia’s 87.59% profit expansion.
Jamaica did well also in terms of return on capital, with Scotiabank Jamaica and National Commercial Bank Jamaica reporting the highest ratios: 57.94% and 48.53%, respectively. In terms of profitability measured in relation to bank asset size, Scotiabank Guyana did the best, with a 5.36% return-on-assets ratio.
Asset growth group
Aggregate assets across the region also shrank, although only marginally, by 1.25% to $102.89bn. The three most notable exceptions form a rather heterogeneous group. Merrill Lynch Bank and Trust, in the Cayman Islands, expanded its assets by 26.57% and leads the asset growth list. In second place is another Cayman-based group, Butterfield Bank Cayman, which is a regional specialist and recorded a 24% asset growth. In third place is Suriname’s Finabank, with 17.46% – perhaps a reflection of the country’s strong GDP growth in 2014: more than 3%, according to the Caribbean Development Bank.
When looking at efficiency, rather than size or profitability, the Cayman Islands’ Atlantic Security Bank fares best, with a 15.86% cost-to-income ratio – a particularly good result even considering the relatively low-cost nature of offshore wealth management. It is followed by the Bahamas’ MMG Bank & Trust and Inteligo Bank with 22.12% and 23.36%, respectively.
The Banker's Top 100 Caricom banks ranking, 2015 originally appeared in the August 2015 issue of the magazine. The full results of the ranking are available on The Banker Database. Find out more about the database, register for a free trial or subscribe today.
