The devastation caused during the 2017 hurricane season has proved a lasting challenge for economies in the Caricom region, as The Banker's rankings show. Silvia Pavoni reports.

CIBC

Caribbean economies are still reeling from the catastrophic hurricanes that hit the region in 2017. 

Reconstruction costs after similarly devastating events of the past surpassed the gross domestic product of some of the affected economies, according to the World Bank. Lost tourism revenues also weigh heavily on these countries: the World Travel and Tourism Council estimates them at $741m for 2017, a figure that would have supported 11,000 jobs in the sector, as reported by the Economist Intelligence Unit.

The Caribbean has traditionally relied on tourism in a way disproportionate to the global average. To compound an already challenging situation, even countries that are less dependant on the sector have yet to completely recover from recession.

Trinidad's banking salvation

Oil-producing Trinidad and Tobago has not yet returned to growth while its oil sector's performance is still far from the highs of the commodity boom. But the twin islands are also the region’s largest banking sector, and this has offered a source of stability to the country's economy. 

Tier 1 capital and assets of the four Trinidadian banks in The Banker’s Top 50 Caricom Banks ranking were stable, while their pre-tax profits rose in 2018. They account for more than 35% and 30% of regional Tier 1 capital and assets, respectively. Their average pre-tax profits growth of 10.74% was a healthy expansion in one of the highest capitalised sectors in the region. 

Port of Spain-based RBC Financial Caribbean continues to top the ranking with Tier 1 capital of $2.1bn. The Canadian group headquarters its regional operations in Trinidad and Tobago and has consolidated operations there. After second placed CIBC FirstCaribbean International Bank, also owned by a Canadian group, there is another Trinidadian name, Republic Financial Holdings, in third place. The country’s other two banks in the ranking, First Citizens Bank and Scotiabank Trinidad and Tobago, are in sixth and eight places, respectively.

Mixed results

The banking sector is not always a source of stability across the Caribbean region, with variable aggregate results in terms of growth of Tier 1 capital, assets and pre-tax profits. It has, however, produced some bright spots, even in the most challenging markets. Haiti’s Banque de l’Union Haitienne tops the Tier 1 capital growth table with a figure of 76.82%. Its assets also grew, as did pre-tax profits by 47.4%, while the country’s aggregate pre-tax profits fell by 60.56% and the economy continued to falter.

The Haitian lender is followed by St Lucia’s East Caribbean Financial Holding and Belize’s Atlantic Bank in the Tier 1 capital growth table.

Scotiabank Anguilla and Jamaica’s JMMB Merchant Bank top the assets growth table. Bahamas’s Inteligo Bank, an offshore institution that is 14th in the regional ranking, follows them with a 19.54% growth in assets. Inteligo also tops the return on assets table with a ratio of 5.11%.

Overall, and despite the region’s ongoing troubles, Caribbean banks showed healthy profitability ratios: an average of 1.72% for the return on assets ratio, and 14.48% for return on capital. Both ratios use net profits, as opposed to pre-tax profits, as a return measure. 

Of the 20 members of the Caricom community, banks from 15 countries make the cut for The Banker’s regional rankings, one less than the previous year, with Suriname dropping off the list.

Caricom ranking 0819

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