Message from the Executive Chairman

The Bank was able to sustain its market leadership position in The Bahamas for indigenous Banks in 2017 despite being faced with a less than vibrant economy and business environment that has now impacted Bahamians for nearly a decade. Despite these long standing headwinds, overall profitability was sound and encouraging and can be attributed to the continued reinforcement of the Bank’s disciplined risk based business model.
As a result of the ongoing and stable profitability, the Board of Directors was pleased to be able not only to recommend continuance of the Bank’s long-standing and favorable shareholder dividend distribution program, but to increase the dividend payout ratio to 75% of net income after preference share dividends from the previous 65%. The increase was based on the Bank’s ongoing high levels of capital above the regulatory requirements and projected medium term requirements.
2017 also proved to be another historic year for existing and potential new shareholders. The Board of Directors recently declared a three-for-one stock split. This stock split is a direct reflection of years of increasing shareholder value and the ongoing liquidity of our shares. The approval of the share split occurred at the Bank’s Annual General Meeting held on May 31, 2017 and took place in October 2017. A positive market reaction to the split saw the Bank’s share price close at $4.90 at year end.
William B. Sands, Jr.
Executive Chairman, Commonwealth Bank

The Customers and Communities we serve

Commonwealth Bank endeavors to enrich the lives of its customers and communities every day. This commitment to service has enabled the Bank to compete and progress in ways that have created additional value for our shareholders and economic growth and stability in our communities and The Bahamas at large. As you peruse this report you may want to note how the Bank “leads the way by example and uses its own resources and expertise to effect positive change in The Bahamas”.

Independent, Safe and Sound Oversight and effective Corporate Governance

As Executive Chairman of the Board, my principal objective continues to be an unwavering focus on the internal leadership of the Bank and overseeing and ensuring the sustainability and soundness of the Bank through the Board of Directors. The Board’s independent oversight processes supported by the diverse backgrounds and market awareness of the individual board members continues to add value to the ongoing stability and safety and soundness of the Bank. I have greatly appreciated their ongoing support and guidance through another challenging year.
The required independent oversight processes are commonly referred to as Corporate Governance Standards and Procedures and have generally been defined as the system of rules, practices and processes by which a company is directed and controlled.
Corporate governance essentially involves the balancing of the interests of a variety of stakeholders including but not limited to board members, shareholders, depositors, ever increasing regulatory oversight and the community at large.
Sound corporate governance does matter. The Bank is committed to applying industry recognized best practices in corporate governance, including having a strong, independent Board of Directors and other generally accepted risk management and control activities.

Sustainability and Growth – The Strength and Support Provided by our Staff

Commonwealth Bank has for many years sought to seek new and high potential staff, when required, from within The Bahamas. This long standing pattern of successful recruitment of Bahamians supported by in-house training programs provided by our Corporate Learning Center has been beneficial to the Bank as it has provided tangible substance to a worthwhile bank objective - Knowledgeable Bahamians helping Bahamians.
Over the last few years I have continually highlighted the need and importance of having an effective recruitment and succession planning process. While progress has been made to address these important issues there remains an ongoing need to continue to reinforce this process to ensure the effective and profitable sustainability of the Bank.
The ongoing support and commitment of the almost 575 staff members has been an important element in the continuing growth and profitability of the Bank. Their efforts and commitment have been greatly appreciated.

Going forward – a time of continuing transition

To address market related opportunities and other circumstances during this ongoing transitional period, as to address the ever increasing costs of regulatory oversight in an effective manner, the Bank will have to balance these issues carefully. A considerable amount of refocusing of products and services will also have to be balanced by ensuring operational activities and any related acquired growth potential is directed at achieving only “Responsible and Sustainable Growth”.
This type of expanded emphasis within Commonwealth Bank will bring closer consistency between the approved risk management process and the entrenched process of control that is provided throughout the Bank. The emphasized linkages are also consistent with the Bank’s Vision, Mission, and are values that are capable of being applied during the types of economic peaks and valleys faced by all Bahamians as well as the Bank itself.
Our primary objective remains: To be the leading Bank in The Bahamas providing personal banking services capable of delivering superior quality of products and services to our customers while also providing opportunities for our shareholders and other stakeholders to achieve their financial goals in a safe and sound manner.

Final Comments

In a recent monthly report, the Central Bank of The Bahamas has indicated that there remains a number of significant downside risks to the Bahamian economy going forward. Overall growth is expected to be mild in the near term with any improvement in employment levels dependent on the performance of the tourism and construction sectors.
As outlined in the aforementioned comments, to move forward, the Bank has recognized that both innovation and change are required to sustain the success achieved in the past.
With caution, we look forward to the challenges and possible rewards that our planned transition process will provide to the Bank itself, customers and other stakeholders going forward.