FINANCIAL NEWS OF BELIZE, JUNE 2010

FINANCIAL NEWS OF BELIZE JUNE 10, 2010

QUARTERLY HIGH SPOTS FROM BANK REPORTING

Total loans: ( round numbers in millions )
Heritage Bank: $112 million, Atlantic Bank $286 million, Belize Bank $678 million, First Caribbean Int’l Bank $156 million, Scotia Bank $499 million

General Loss Reserves: Heritage Bank, ( deficit $817,000 ), Atlantic Bank ( deficit $3 million ), Belize Bank ( $4 1/4 million ), First Caribbean Bank ( $2 ½ million ), Scotia Bank ( $4 ½ million)

Net Income before taxes: Heritage Bank ( $762,000 loss), Atlantic Bank $305,000, Belize Bank $797,000, First Caribbean Bank $503,000, Scotia Bank $7 million.

Base Lending rates: Heritage Bank 14%, Atlantic Bank 13%, Belize Bank 14.5%, First Caribbean 14%, Scotia Bank 16%
Lending rates are negotiable between the bank and the customer. Depends on the skill of the customer.

Profitability before taxes: Heritage Bank (-1.15%), Atlantic Bank 1.61%, Belize Bank (-1.10% ), First Caribbean Bank 1.12%, Scotia Bank 5.45%

Return on average equity investment AFTER taxes: 69.32%, Atlantic Bank 62.32%, Belize Bank 51.57%, First Caribbean Bank 66.43%, Scotia Bank 81.18%

***There are no figures for dividends given to Bank shareholders published from Central Bank.

**** Bank Certificate of Deposit rates have come down. The big players like Insurance companies and Social Security are earning about 9 ½% while small depositor in the hundreds of thousands of dollar deposits, are earning about 6 ½%. There seems to be bank collusion across the board, as the CD interest rates are advertised at the lowest common denominator and are uniform, at least in San Ignacio Town banking stretch.
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CREDIT UNION LOAN INTEREST RATES ARE 12% SIMPLE INTEREST AND THE BEST DEAL IN THE COUNTRY FOR SMALL AND LARGE CUSTOMERS. They do not however attract large depositors because they offer no comparable dividends, or certificate deposits in competition with commercial banks. LOANS ARE CHARACTER LOANS AND DO NOT REQUIRE EQUITY. THEIR LOSS RATE ON LOANS IS LOWER THAN EXPERIENCED BY COMMERCIAL BANKS WHO ARE IN THE REAL ESTATE COLLATERAL BUSINESS.
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INTERNATIONAL DERIVATIVE TRADING, such as in Commodities, Futures, and Options are used by over a dozen private traders and the odd agriculture processing facility, and sometimes oil supplies.

The average is hard to guess at; as the private trading must take place in foreign lands and pay taxes in those lands. Thus there are no local statistical records. This is due to the inability to exchange local Belize Currency into Foreign Exchange easily. Local Belize currency has no value outside the borders of Belize. Traders therefore must have foreign bank accounts and trading accounts. Exchanges like Tokyo, Singapore, London, Toronto, Vancouver, New York and Chicago are commonly used, via the internet trading platforms. Globex is a favorite with 24 hour trading 7 days a week. Returns by anecdotal reports average 20% to 40% on equity annualized and in some cases LOSSES are experienced, as well as the odd good, over 100% return. Attempts to create a local stock market have so far failed, as also an International derivative trading competitive business environment. Mostly due to the problem of the Belize Currency government control requirements. If local banks were to get into derivative trading, they would have to establish overseas accounts in acceptable international currencies. Then they would have to establish a small department to offset the risks involved with their local operations. They could be operated from Belize via the internet, though internet service is expensive and inadequate, with minimal bandwidth and speeds, where available; which is not really where needed in rural locations. The current internet providers are about 20 years behind the times.
The AUXILLOU GROUP this year running a trial derivative trading pilot project, estimate returns at 30% annualized before foreign taxes. The Canadian branch are reporting about 20% annualized returns on stock trading.
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GOVERNMENT BORROWING: The present government DEBT TO GDP ratio is unknown, but suspected to be about 120% of GDP, a disastrous state of affairs. The last government peaked loan borrowing at 127% and then later in a 5 year austerity drive reduced it to 76% of GDP. The percentage is climbing again and the current Finance Minister is not proud of it and secrecy seems to be the rule? When it comes to debt, the government is a basket case.
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