Clarien Bank announces increase in net profit, strong growth in new loans
Clarien Bank Limited (“Clarien Bank”), a wholly-owned subsidiary of Clarien Group Limited (“CGL”) today announced a net profit for the year ended December 31, 2017 of $3.9m – a 220% increase over the previous 12 months.
During 2017, Clarien continued to make significant investments in expanding its product portfolio, enhancing operational efficiencies and maintaining disciplined expense management while pursuing growth opportunities within existing and select new markets. Sales and service excellence processes were refined to improve efficiency and effectiveness and an increased focus placed on remediation efforts to ensure compliance with regulatory requirements. In addition, an employee engagement capital improvement plan was implemented to provide Clarien employees with the resources and learning needed to deliver on the organisation’s purpose of making it easier for clients to navigate their financial future.
Clarien continued to build on a comprehensive business line portfolio through the expansion of Merchant Services, Clarien VISA® card usage and rewards campaigns and attractive CD savings products. The momentum of Clarien iTrade – an online brokerage platform which allows clients to trade global securities 24/7 in 120 markets – continued with a 42% increase in growth of AUA in just 12 months and revenue growth of over 140%.
Following the initial investment by Edmund Gibbons Limited (“EGL”) and Portland Private Equity (“PPE”) in the Clarien Group in April 2016, CGL further announced in December 2017 the partnership with NCB Financial Group Ltd. (“NCBFG”) and Portland Private Equity whereby NCB holds 50.1% majority shares of CGL, funds managed by PPE now hold 17.92% and EGL retains a 31.98% shareholding.
Clarien’s partnership with NCB, which is one of the most successful financial services groups in the Caribbean, will enable the organisation to expand offerings locally, regionally and globally. This partnership, together with a strong balance sheet, empowers Clarien to offer a wider range of attractive products to our customers while remaining committed to contributing to the growth of Bermuda’s reputation to attract more business to the Island and thereby create conditions that will benefit the Bermudian economy as a whole.
Net interest margin for the year remained strong at 3.68%, albeit lower than the comparative period (December 31, 2016: 3.70%) The change in net interest margin is
primarily driven by the change in the composition of assets held on the balance sheet. 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 $11.3 million from $756.4million at December 31, 2016 to $745.1 million at December 31, 2017. As a result, interest income on loans, mortgages and credit cards was down 1% in 2017 to $51.7 million from the previous year’s figure of $52.0 million. However, higher levels of accelerated payments were offset by continued strong growth in new lending which increased 47% from 2016 to $78.0 million in 2017.
Underlying earnings were supported by a $1.3 million increase in net fee and commission income to $11.6 million, which was 12% higher than the previous year’s figures of $10.3 million. Key business lines performed strongly; Banking and Asset Management benefited from higher transaction volumes and positive market movements during 2017. Non-interest expenses remain a key focus for the Bank. For the year, expenses increased to $46.7 million (December 31, 2016: $44.7 million), driven primarily by a $1.1 million incurred one-off cost relating to investment in the Bank’s Anti Money Laundering programme.
Credit related impairment losses on loans and advances to customers was $6.0 million in 2017 (December 31, 2016: $8.6 million). Impaired loans of $75.8 million represented 10% of the total loan portfolio at December 31, 2017, and were down 4% from a year ago. Specific provisions on balance sheet against impaired loans increased from $26.1 million in 2016 to $27.6 million in 2017.
Ian Truran, Clarien Chief Executive Officer, commented: “With an increase in net profit and strong growth in new loans, we continue to position Clarien Bank for future growth through operational efficiencies and portfolio expansion. “We made significant investments in products, services and technology, including:
- Enhanced online and terminal transactions for commercial clients through Clarien Merchant Services;
- Increased rewards flexibility and online purchase security for our Clarien VISA® card clients;
- An innovative, self-directed online brokerage service – Clarien iTrade – which enables investment clients to build the right portfolio to reach their investment goals.
“Clarien continues to optimise performance by streamlining processes and investing in automated solutions as customers seek more mobile, personalised and digital banking options. We are committed to exceeding our clients’ expectations by being customer obsessed through innovation and service excellence.
“In partnership, our shareholders, the Gibbons family through Edmund Gibbons Limited, NCB Financial Group Limited and Portland Private Equity Limited, are
committed to offering the highest quality products and services to meet the needs of our discerning clients.
“Strengthened by the NCB integration, Clarien is well-positioned for exponential growth and we look forward to the coming 12 months with increased determination and confidence.”