Online Banking

Latest News

Europe’s ‘Retreat’ Outpaces Latin Growth For Bahamas Published: 21 April 2023

  • The Bahamian international banking sector is contracting because the “retreat” of European assets is “outpacing” new growth from Latin America. That’s the proclamation from the Central Bank governor.
  • John Rolle, in written replies to Tribune Business questions, acknowledged that the financial services industry has yet to regain momentum following two decades of scrutiny and regulatory pressures imposed by major world powers such as the Organisation for Economic Co-Operation and Development (OECD).
  • In responding to the industry’s needs, the Central Bank has worked with industry and government to help introduce newly regulated products such as private trust companies (PTCs) and executive entities, which allow financial institutions to use additional regulated vehicles to serve their client needs. The use of these vehicles has increased over the last decade.
  • “The retreat of the European business summarises the response to heightened scrutiny that international financial centres like The Bahamas have faced over at least two straight decades around anti-money laundering and tax transparency standards,” Mr Rolle stated.
  • The development has continued despite The Bahamas’ removal from the Financial Action Task Force (FATF) List of Countries that have been identified as having strategic Anti-Money Laundering (AML) deficiencies back in 2020. The country was also de-listed from the European Union’s Blacklist in January 2022.
  • In this regard, the Central Bank and other regulators continue to work to improve the jurisdiction’s anti-money laundering profile through national efforts to secure peer assessments that validate the effective and compliant standing of The Bahamas against the rest of the world.
  • These measures include direct outreach to correspondent banks to ensure more accurate assessments of anti-money laundering risk management practices and an annual anti-money laundering research conference. These will aid banks and trust companies in maintaining solid correspondent banking relations, which are essential to the viability of their business models.

(Source: The Tribune)

Strong UK Pay Growth Boosts Chance Of Bank Of England Rate Rise Published: 21 April 2023

  • British wages rose faster than anticipated last month, in a move that economists judge may tip the Bank of England towards a further rise in interest rates next month, despite an unexpected increase in joblessness too.
  • The Office for National Statistics (ONS) said the unemployment rate edged up to 3.8% - its highest since the second quarter of 2022 - rather than holding at 3.7%, as forecasted by economists in a Reuters poll.
  • Annual pay growth for the three months to January was revised up to 5.9% and held at that level for the three months to February - above all forecasts in the Reuters poll, which had pointed to a drop to 5.1%. Excluding bonuses, wage growth held at 6.6%.
  • Sterling strengthened and government bond yields rose to a one-month high after the data release, as financial markets saw a more than 80% chance of the Bank of England (BoE) raising interest rates to 4.5% in May to help bring down inflation, which was above 10% in February.
  • High inflation meant that in real terms, average earnings in the three months to February were 4.1% lower than a year earlier, one of the biggest annual drops since ONS records started in 2001. Discontent about pay has been especially high in the public sector, leading to widespread industrial action since late last year. Junior doctors are the latest group to strike, seeking a 35% pay rise to compensate for below-inflation pay rises over more than a decade.
  • "Progress in the labour market is painfully slow," said Tony Wilson, director of the Institute for Employment Studies. "Three years on from the start of the pandemic, it's clearer than ever that we are being left behind by other major economies."

(Source: Reuters)

Global Rice Shortage Is Set To Be The Biggest In 20 Years Published: 21 April 2023

  • From China to the U.S. to the European Union, rice production is falling and driving up prices for more than 3.5 billion people across the globe, particularly in Asia-Pacific – which consumes 90% of the world’s rice.
  • The global rice market is set to log its largest shortfall in two decades in 2023, according to Fitch Solutions. A deficit of this magnitude for one of the world’s most cultivated grains will hurt major importers, analysts told CNBC.
  • “At the global level, the most evident impact of the global rice deficit has been, and still is, decade-high rice prices,” Fitch Solutions’ commodities analyst Charles Hart said. Rice prices are expected to remain notched around current highs until 2024, stated a report by Fitch Solutions Country Risk & Industry Research.
  • The price of rice averaged $17.30 per cwt (one hundredweight) through 2023 year-to-date, and will only ease to $14.50 per cwt in 2024, according to the report.
  • There’s a short supply of rice as a result of the ongoing war in Ukraine, as well as bad weather in rice-producing economies like China and Pakistan. In the second half of last year, swaths of farmland in the world’s largest rice producer China were plagued by heavy summer monsoon rains and floods. The likely impact of this is that it could put some upward pressure on food prices that have been on a downward trajectory for the past twelve months.

 (Source: CNBC)

Political Stability To Improve In Jamaica, As Inflation Comes Down And Government Tackles Drug Crime Published: 19 April 2023

  • Fitch Solutions expects that falling inflation, stable employment, a rebounded tourism industry, and efforts to reduce crime, will improve political stability in Jamaica in 2023.
  • According to the agency, inflation will average 4.5% y-o-y, from 10.4% in 2022, supporting social stability. Unemployment remains low at approximately 6.2%, and the latest tourism data suggests that arrivals are back to pre-Covid levels, which will further support earnings, and limit social unrest.
  • It is anticipated that the tourism industry will stay strong through most of 2023 and that the sector will employ about 30.0% of the workforce in 2023, up from 23.0% in 2021 as arrivals continue to rebound.
  • Crime rates are expected to remain low due to government measures, for example, states of emergency in several municipalities to tackle gang violence and highly visible drug seizures and arrests, which will also support social stability.
  • As a result, the Short-Term Political Risk Index (STPRI) increased from 72.7 out of 100 to 73.5 and its ‘social stability’ component from 52.5 to 55.0.
  • Risks to the forecast include a stronger-than-expected shock to tourism, ongoing structural problems with gang-related violence, and a potential uptick in crime which can weigh on business activity and tourism.

(Source: Fitch Solutions)

Building Tourism Resilience is Critical – Minister Published: 19 April 2023

  • Building tourism resilience is critical to ensuring the sector’s sustainability and its contribution to economies, says Tourism Minister, Hon. Edmund Bartlett.
  • Chairing the Fifth Special Meeting of the Inter-American Committee on Tourism (CITUR), Mr. Bartlett warned that despite tourism being one of the most significant contributors to global output, providing jobs, incomes and livelihoods for millions of people, the sector remains susceptible to external shocks and crises. These include natural disasters, economic downturns, and pandemics.
  • “As the sector continues its recovery, it is important that we acknowledge the importance of putting people first, investing in people and developing the right skills as crucial elements of building tourism resilience over time. It is essential to train and educate the workforce to be adaptable to changing circumstances such as new technologies and evolving customer preferences,” he said.
  • It is also important that tourism also prioritises the creation of a workforce that reflects the communities it serves to deliver both an enhanced product, as well as to accrue more benefits to a broader range of stakeholders in the tourism value chain.
  • He emphasised that a resilient tourism product must operate in a way that protects the environment and supports local communities, including small and medium-sized tourism enterprises, while at the same time ensuring economic viability.
  • “As a region, we have to position ourselves to take advantage of emerging technologies and to better use the available science and data to inform decision-making, particularly in relation to building tourism resilience,” Mr. Bartlett added.
  • Tourism accounts for about 34% of the economic output in Jamaica and 31% of employment in Jamaica. Tourism’s contribution to GDP and employment is much higher for some Caribbean neighbours and as such it is imperative that the region not only grow the product but also ensures that growth takes into consideration the economic, social and environmental issues as well. 

(Source: JIS)

Waning US Demand In H223 To Slow Growth In Dominican Republic Published: 19 April 2023

  • Fitch forecasts that the Dominican Republic’s real GDP growth will slow from 4.9% in 2022 to 3.5% in 2023, primarily due to a weakening US economy in H223.
  • Preliminary 2022 growth statistics were strong, coming in just below Fitch’s estimate of 5.0%, as resilient US demand for DR’s goods and tourism underpinned strong overall export growth (13.7%) and domestic employment, which sustained private consumption growth (3.3%). However, DR incomes and savings were likely diminished by a 5.2% contraction in remittance inflows in 2022 (the first recorded contraction in the data going back to 2010).
  • The projected slowdown in the US will pose major headwinds to DR’s export and investment growth, which by extension will affect private consumption growth.
  • Since the start of 2023, fading base effects and easing private demand have led to weak growth. Headline inflation remains elevated at 5.9% y-o-y, which suggests that households’ real incomes were muted, feeding into weaker demand.
  • Owing to these factors, Fitch’s core view is that the Dominican Republic’s economy, like many other Caribbean markets, will be undercut by a mild recession in the US in H223, with growth slowing in the same period. Nonetheless, economic activity will pick up slightly as peak tourism season will support income growth.

(Source: Fitch Solutions)

Barbados Looks to Latin America To Develop Tourism Sector Published: 19 April 2023

  • The Barbados government says it will open a new office in Panama City, Panama, as it moves to further deepen its relationship with Latin America (LATAM).
  • The Tourism and International Transport Minister, Ian Gooding-Edghill, expects this to aid Barbados in continuing to strengthen the relationship and marketing efforts in the region and further demonstrate the confidence in this market for the growth of the tourism industry.
  • He said with the return of the Copa Airlines flight connecting Barbados to LATAM countries, the destination has facilitated the arrivals of thousands of travellers, including those looking to enjoy the destination under Barbados' 12-month Welcome-Stamp visa.
  • Latin America is poised to be an important market for the growth of the tourism industry and trade relations with different partners in the region.
  • Barbados has continued to see an increase in arrivals from Brazilian and Latin American travellers and is looking to continue its growth by welcoming more visitors through direct services via Copa Airlines.
  • Barbados is heavily reliant on tourism for economic growth and job creation, this new extension will see the country benefiting from greater inflows which would drive up growth and help to put the country back to pre-pandemic levels.

(Source: CariCris)

More US Consumers Are Falling Behind On Payments Published: 19 April 2023

  • According to executives at the biggest U.S. banks, consumers are starting to fall behind on their credit card and loan payments as the economy softens, although they said delinquency levels were still modest.
  • Profits at Bank of America Corp, JPMorgan Chase & Co, Wells Fargo & Co and Citigroup Inc. beat analyst forecasts as lending giants earned a windfall from rising interest rates. However, industry chiefs warned that the strength would tail off this year as a recession looms and customer delinquencies climb.
  • "We've seen some consumer financial health trends gradually weakening from a year ago," Wells Fargo Chief Financial Officer Mike Santomassimo said on a conference call Friday to discuss its first quarter results.
  • Citigroup made larger provisions for credit losses even as it brought in more revenue from clients' interest payments on credit cards. Delinquency rates were rising as anticipated, but still stood below normal levels in the bank's "very high quality" loan portfolio, said Mark Mason, the bank's finance chief.
  • "We have tightened credit standards specifically as a result of the current market environment in cards, we continue to calibrate our credit underwriting based on what we're seeing based on macroeconomic trends," Mason said.

(Source: Reuters)

Local Point to Point Inflation Falls to 6.2% in March Published: 18 April 2023

  • For March 2023, the All-Jamaica Consumer Price Index (CPI) increased by 0.1 per cent. The point-to-point inflation rate (March 2022-March 2023) has, however, fallen further to 6.2 per cent. Notably, the figure represents the lowest point-to-point inflation figure since August 2021 (6.1%). This current inflation figure is just outside the Bank of Jamaica’s (BOJ) target range of 4.0 to 6.0 per cent.
  • The 0.1 per cent increase in the monthly inflation was largely influenced by the 0.8 per cent increase in the index for the ‘Food and Non-Alcoholic Beverages’ division as prices continued to increase within the class ‘Vegetables, tubers, plantains, cooking bananas and pulses’. This was attributed mainly to lower supplies of some agricultural produce resulting from dry weather conditions.
  • The rise in the CPI was also influenced by the 1.1 per cent increase in the index for the division ‘Restaurants and Accommodation Services’ resulting from higher prices for meals consumed away from home.
  • The inflation rate was, however, tempered by a 1.8 per cent fall in the index for the ‘Housing, Water, Electricity, Gas and Other Fuels’ division and a 0.2 per cent decline in that of the ‘Transport’ division.
  • On May 19, 2023, the BOJ will host its monetary policy meeting and we anticipate that the bank will continue holding the policy interest rateat 7% as it continues to watch the pass-through effects of previous rate hikes.

(Source: STATIN)

Knutsford Express Realises 304.5% Increase In Bottom-Line YTD Published: 18 April 2023

  • Knutsford Express Services Limited (KEX) Limited recorded a net profit of $68.3Mn for the third quarter that ended February 28, 2023. This represents a 75.9% increase in profitability when compared to the $38.8Mn recorded over a similar period in 2022.
  • Given the Q3 results, coupled with the strong performance in the first half of the financial year, net profit totalled $211.4Mn for the nine months ended February 2023, up 304.5% (or $159.1Mn) year-over-year.
  • Revenue for the quarter was up by 55.3% y-o-y to $467.9Mn. Similarly, the YTD showed a 65.4% (or $506.5Mn) increase in company revenues to $1.3Bn. This was driven by reduced mobility restrictions, increased local and international travel, as well as its strategic efforts to diversify its revenue streams as seen by the significant investments made towards its courier and rental services.
  • However, administrative and general expenses were 41.4% (or $293.8Mn) higher in the nine months relative to the same period last year. Despite higher expenses, operating profit grew by 325.7% (or $212.7Mn) as strong revenue growth outpaced increased costs which translated into a 13.3 percentage point (pp) increase in the operating margin to 21.7% in 2023.
  • Going forward, as tourism continues to rebound and as the company continues to expand its courier and rental services, it is expected to generate additional diversified revenue, making it more resilient to downturns in the economy thereby aiding long-term growth.
  • KEX’s stock price has increased by 32.4% since the start of the calendar year. The stock closed Monday’s trading session at $11.74 and currently trades at a P/E of 21.3x which is above the Junior Market Others Average of 21.1x. This higher P/E ratio is likely reflective of its expected growth trajectory.

(Sources: JSE & NCBCM Research)