Listening. Helping. Building.

Clarien Bank Limited (“ClarienBank”), a wholly-owned subsidiary of Clarien Group Limited (“CGL”) today announced a net profit for the year ended December 31, 2016 of $1.2m – a 133% increase over the previous 12 months.

During the past 12 months, Clarien has continued to make significant investments in its product offerings, technology, risk and operational infrastructures while maintaining disciplined management of expenses and achieving improved levels of efficiency.

Clarien built on the successful Q2 2016 launch of a new range of Clarien VISA credit cards and Clarien iBank, an enhanced electronic banking system, by continuing to focus on improved products and superior client service. Clarien Merchant Services was launched in Q4 2016, providing a comprehensive suite of secure and flexible card payment and e-commerce solutions for commercial clients.

The Bank’s continued efforts in expanding its wealth management and asset management expertise and services were recognised in 2016 when the prestigious World Finance magazine honoured Clarien with its award for Best Wealth Management Provider, Bermuda. In 2017, Clarien will introduce further banking and investment products for premium clients.

Following the $12.6 million investment by Edmund Gibbons Limited and Portland Private Equity in the Clarien Group in April 2016, the Bank continued to work towards its long-term goal of strategic and sustainable growth that will strengthen and secure its position as a leading financial institution. The transaction increased the Bank’s total capital ratio to approximately 17.5% (at December 31, 2016) and further strengthened a solid balance sheet that remains highly liquid.

For the year ended December 31, 2016, Clarien Bank reported a net profit of $1.2m, an increase of $0.7m (133%) over the previous year.

Financial Highlights:

2016 2015
Total revenues before loan loss provisions $55.1m $56.8m (3%)
Operating expenses ($44.7m) ($47.1m) (5%)
Net profit $1.2m $0.5m 133%

Results Overview:
Over the past 12 months the trend of clients using cash to pay down mortgages in order to avoid continued debt has continued. The loan portfolio reduced $53.3m from $809.7m at December 31, 2015 to $756.4m at December 31, 2016. As a result, interest income on loans, mortgages and credit cards was down 4% in 2016 to $52.0m from the previous year’s figure of $54.4m. However, higher levels of accelerated payments were offset by strong growth in new lending which increased $30.0m (132%) from 2015 to $52.6m in 2016.

Underlying earnings were supported by a $2.4m reduction in operating expenses to $44.7m, which was 5% lower than the previous year’s figures of $47.1m. The reductions were achieved through substantial savings on information technology expenses due to the completion of debit and credit card initiatives, improved office efficiencies, continued disciplined budgeting and a $0.9m reduction in salaries and benefits.

Non-performing loans, being loans past due by 90 days or more, plus impaired loans, represented 15% of the total loan portfolio at December 31, 2016, of which 9%, or $79.0 million, were impaired, up from 8% a year ago. Specific provisions on balance sheet against impaired loans increased from $20.7 million in 2015 to $26.1 million in 2016.

Ian Truran, Chief Executive Officer, commented:
“Over the past 12 months we continued our efforts to position Clarien Bank for future growth and improve both our product offerings to clients and our operational efficiency.

“We made significant investments in products, services and technology, in particular:

  • Clarien Merchant Services, an advanced suite of products and services for commercial clients that enable businesses to accept local and global transactions via point-of-sale terminals using the latest chip and pin technology, online or mobile devices.
  • A new suite of Clarien VISA® credit cards, offering enhanced and flexible rewards, improved Chip and Signature security, and 24-7 service.
  • Clarien iBank, our new electronic banking platform, bringing customers enhanced security,convenience and functionality.

“The successful launch of these projects resulted in a substantial reduction in technology costs that contributed to a $2.4 million reduction in our operating expenses. It should be noted that the reduction was achieved at the same time as incurring $0.7m in costs associated with the introduction of the Bermuda Deposit Insurance Scheme. We continue to work on prudently managing our
expenses while retaining our commitment to customer service excellence.

“We continue to improve our client information in order fulfill our legal obligations as a Bermuda regulated financial institution as well as meeting the needs of our clients for protection from fraud and financial crime.

“Following the substantial investment made in 2016 by Edmund Gibbons Limited and Portland Private Equity, the Bank is well-positioned for strategic growth and we look forward to the coming 12 months with increased confidence and energy.

“Although the continued general increase in Bermuda property prices is encouraging, the continued high level of non-performing loans is an indication that the island’s economy still faces challenges. Clarien’s approach is to continue to work with borrowers facing challenges and therefore the improvement in non-performing levels will take time while we conservatively increase our reserves against troubled assets.

“It is hoped that initiatives such as the HomeStart programme, which we launched in conjunction with the Bermuda Housing Corporation in January 2017, will help further stimulate economic recovery. Year-on-year, we saw a 132% growth in new loans over 2015 and we continue to pursue new quality lending opportunities.

“Further, despite the increasing interest rate environment, Clarien continued to make every effort to be considerate to borrowers and reward depositors with innovative products such as our 3- and 4-year Double Your Interest Certificates of Deposit and our Notice Account, which will be introduced in Q2 2017.”

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