NCB (St Vincent) declares
EC$7.2 million loss
"Controversial debt write-off of more than EC$10.7M,
points
to mis-management and Governmental influence on the bank's operations."
The National Commercial Bank of St Vincent and the Grenadines Ltd (NCB), the government-owned commercial bank, posted a EC$7,221,846 loss (US$0.37=EC$1) for the year ended June 30, 1996.
According to the Bank's balance sheet and profit and loss statement,
published in the January 14, 1997 issue of the SVG Gazette, income
for the period was $23.1 million. $16.1 million came from the
interest on loans and advances, $3.5 million came from return
on investments, $3.2 million from exchange, commissions and service
charges and about $0.17 million from other sources.
Operating expenses reached $30.3 million, giving rise to an operating loss of $7.2 million, before taxes. Some expenses were remuneration ($3.69 million), depreciation ($1.22 million), management fees and head office expenses ($0.24 million), and other expenses totalling $3.61 million. Interest expense of $10.8 million was the largest item, followed closely by a massive provision for loan losses and bad debts of $10.7 million.
A provision is a technical accounting term referring to "an
amount written off or retained to provide for depreciation in
the value of assets, or retained to provide for a known liability."
Provisions made against anticipated losses are charges against
the bad debts account and, therefore, must be considered before
final profits are determined. Because of the inability to predict
the risk of each loan, provisions for bad debts are included in
most bank financial statements.
NCB's loan provision of more than $10 million is inordinately
high when compared with previous years and has completely wiped
the bank's profit for the 1996 financial year.
The bank's management team has come under serious criticism since
1993, when the operational fortunes of the bank began their downward
slide. There has also been strong political influence on the bank's
operations.
The latest controversy forced the resignation of then Attorney General, Carlyle Dougal, late last year. The bank had also advanced several large loans for Government projects which eventually ran bankrupt due to poor management and inadequate operation controls. NCB was also unable to fund a restructuring plan proposed by the St Lucia Banana Growers' Association to provide bridging finance to the end of February, 1997.
The 1996 financial year closed with assets of $289.5 million
and deposits totalling $261.6 million. Now in its 20th year of
operation, the Bank had posted profits every year, until now.
EXECUTIVE TIME was unable to contact NCB's General Manager,
Digby Ambris for comment.
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