ECCB 2015/2016 Annual Report

EASTERN CARIBBEAN CENTRAL BANK

Reserve balances - $422.9 million, Participating Governments’ Call accounts - $128.5 million, Currency in Circulation - $87.3 million and Bankers’ Collateral accounts - $16.5 million. Those increases were tempered by a reduction of $28.1 million in Participating Governments’ Securities account. Total Equity decreased by $11.3 million (4.46 per cent), mainly as a result of a decline of $10.0 million in the General Reserve as funds were utilised to cover the Bank’s net loss. There was also a decline of $6.1 million (29.49 per cent) in the Pension Fund Reserve due to the recording of actuarial losses on the Bank’s Defined Benefit Pension Fund in accordance with International Financial Reporting Standards (IFRS). The effects of those decreases were moderated by an increase of $4.7 million (27.40 per cent) in the market value of foreign securities as the US Bond market strengthened over the financial year. Statement of Income or Loss The financial performance of the Bank was more favourable compared to the previous financial year. Notwithstanding the Federal Reserve’s increase in the benchmark interest rate in December 2015, the performance of the Bank’s foreign reserve assets continued to be impacted negatively as US interest rates remained at historical lows. Consequently, the net loss for the financial year was $10.0 million, a decrease of $2.1m (17.51 per cent) over the previous year’s net loss of $12.1 million. The reduction in net loss was primarily attributable to an increase of $4.7 million in net interest income offset by an increase of $3.2 million in operating expenses. Chart IV shows the movement in consolidated profit/(loss) for the period 2010 to 2016.

Chart IV

Operating income for the financial year increased by $5.4 million (9.60 per cent) to $62.0 million over the previous year. That was mainly attributable to increases in interest income from the Bank’s foreign reserve portfolio, commission income on foreign transactions and the recording of income from banking licence fees under the provisions of the new Banking Act 2015. Operating expenses of $73.1 million increased by $3.2 million (4.52 per cent) over the previous financial year. The increase was primarily due to an increase in Currency Expenses and an increase in Administrative and General Expenses mainly as a result of the recording of a provision for impairment loss on accounts receivable.

INTERNAL MANAGEMENT

Two of the major work programme activities for the year included the following external assessments: 1. Quality Assurance Review (QAR) of Internal Audit Department (IAD); and 2. Review of the Bank’s Risk Management Framework.

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ECCB A nnual R eport 2015/2016