TT banks still making big bucks
There are not many countries in the world where banks are doing well-Trinidad and Tobago is an exception.
There may be an international financial meltdown with banking giants falling like ninepins and heavy hitters like Citigroup being bailed out by the United States Government but here in Trinidad and Tobago the banking industry is in fairly good shape.
Despite the recent convulsions in the C.L. Financial Group where a Government bailout may cost the taxpayers, at least, over TT$10 billion (US$1.7 billion) and the reverberations from the Stanford financial empire bacchanal continue to be felt in the Caribbean, Latin America and elsewhere; local banks are making big bucks.
Scotiabank, reportedly the most conservative local bank, has just reported first quarter after tax profits of $119.5 million – a 10 per cent increase over the profits for the corresponding period last year.
RBTT recently announced profits of TT $1.3 billion (US $200 million) for its last financial year and Republic Bank – which experienced a small run after it was disclosed that the Government had acquired 55 percent shareholding which previously belonged to C.L. Financial – also recorded whopping profits of TT $1.2 billion (US $199 million).
State-owned First Citizens, which is now saddled with the troublesome Clico Investment Bank (CIB) and CMMB portfolios, raked in TT $463 million (US $77 million).
The impact of these entities and the extent of the run on Republic Bank will surely be reflected in the next financial reports.
Citibank, First Caribbean, Intercommercial and the Bank of Baroda were all reported to be in the black.
The robust performance of the banking sector reflects first of all the state of the strongest economy in the Caribbean (although, admittedly, the cracks are beginning to show) and, secondly, the essential ultra-conservatism of local bankers.
There are no hedge funds or derivatives here and bankers, scrupulously, observe the manual for mortgages in a country where the Government offers first time low income homeowners mortgage rates of two per cent.
However, some public skepticism has begun to creep in following the C.L. Financial and Stanford debacles.
Also, the energy sector has begun to experience problems as commodity prices begin to fall. The real estate bubble has begun to burst and there is a slowdown in construction
This is worrisome to local investors and money men. In the past, there would have been capital flight with the destination being North America but, things have changed.
A financial expert told TNTINSIDER:
“There is no safe haven anymore. It is no longer prudent to put your money in an American bank or invest in mutual funds or derivatives. The situation is just as bad in Europe.”
The empirical evidence is that there is still a lot of confidence in the banking industry in Trinidad and Tobago and with the Central Bank keeping a lid on things regarding excess liquidity in the system and interest rates this will hardly change anytime soon.