Home' Trinidad and Tobago Guardian : May 24th 2015 Contents MAY 24 • 2015 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
STOCKS | SBG11
ANSA Merchant Bank
Ltd (AMBL) is a major
subsidiary of the
ANSA McAl Group,
which is involved in
and directly owns
82.48 per cent of the
company. AMBL together with its TATIL sub-
sidiaries provide many banking and insurance
services to the AMCL group as well as to the
Although not as robust as in 2013, AMBL s
results in 2014 were still quite strong but were
adversely influenced by domestic equity
We will now review AMBL s performance
for its fiscal period ended December 31, 2014.
Changes in financial position
Total assets rose from the 2013 level of
$6.09 billion to $6.62 billion last December;
this increase reflected an advance of 8.7 per
The principal driver of this improvement
was the 30.5 per cent increase in the values
of investment securities, which rose from
$2.63 billion to $3.43 billion.
The latter figure accounted for 51.8 per cent
of total assets. Both equities and corporate
bonds exhibited strong increases; the former
advanced to $1.05 billion from $643 million
while the latter rose from $586.5 million to
Accounting for 15.3 per cent of assets, leased
assets and instalment loans registered at $1.01
billion last December; this was 10.1 per cent
greater than the previous year s $917.5 million.
On a percentage basis, gross finance leases
increased by 13.7 per cent to $308.1 million
from $271.2 million.
Although comprising a larger share of the
total, gross hire purchases rose by 8 per cent
to $915.7 million from the previous year s
On a net basis, the personal sector exhibited
strong growth of 32 per cent, moving to $380
million from the previous balance of $287.7
million. Leases and advances to the commercial
sector registered a marginal increase moving
to $635.1 million from $633.9 million.
Other debtors and prepayments fell to $17.5
million from the previous year s $279.5 million.
In the main, this reflected the elimination of
$261.7 million in proceeds from investments,
which was the most prominent component
of the 2013 figure.
Also declining was cash and short-term
funds, which closed 2014 at $745.6 million
from the previous year s $1.05 billion. Both
cash balances and central bank reserves were
little changed; the former valued at $464 mil-
lion while the latter was $71 million. In con-
trast, short-term deposits with other banks
contracted to $210.6 million from $512.8 mil-
Total liabilities rose by 9.1 per cent, moving
up to $4.76 billion from $4.36 billion as at
Accounting for 48.6 per cent of this total,
customers deposits and other funding instru-
ments rose by 10.7 per cent to $2.31 billion
from the 2013 level of $2.09 billion. At $966.2
million, the largest component (41.8 per cent)
was sourced from private companies, estates
and financial institutions.
Insurance contract liabilities closed 2014
at $1.21 billion; this represented a 6.6 per cent
increase over the previous year s $1.13 billion.
Life insurance contracts rose to $924.8 million
from $867.8 million, or by 6.6 per cent. Gen-
eral insurance contracts increased by 6.7 per
cent to $282.8 million from $265.1 million in
Debt securities in issue increased to $759
million from the previous year s $672 million.
The net increase of $87 million included a
new medium-term note, which was issued
in November 2014 for $250 million at an inter-
est rate of 3.35 per cent; this note matures
on November 22, 2022. A US$25 million
(TT$157.5 million) debt tranche matured in
2014, thus helping to reduce the net year-
on-year increase. A $350 million debt at 6.5
per cent interest matures on June 4, 2015.
Total equity advanced to $1.86 billion from
the previous level of $1.73 billion. The bulk
of this figure relates to stockholders equity
as only $464k comprises minority interest;
this sum represents a former director s 0.7
per cent stake in TATIL Life Assurance Ltd.
The retained earnings balance rose by a net
of $111.4 million to close 2014 at $991.5 million.
The major movements showed that profit for
the year contributed $208.1 million while div-
idends to shareholders consumed $85.6 mil-
Having 85,605,263 shares outstanding, each
share has a book value of $21.76 (2013: $20.24).
This figure was $17.88 as at December 2012.
Income and Profits
Total operating income declined by 11.7 per
cent to $703.4 million from the previous year s
The most significant contraction was noted
under investment income, which fell to $161.6
million from 2013 s $269.2 million. Interest
and dividends from other financial assets
declined to $85 million from $96 million pre-
viously. More significantly, unrealised results
from investments, characterised as fair value
through income statement, moved from a
positive $67.2 million in 2013 to a negative
$29.7 million last year. Given that all three
local stock market indices declined in 2014,
this huge swing of $96.9 million was not sur-
prising. Increases were noted under the cat-
egory interest and dividends through income
statement, where income rose to $63.9 million
from $43.8 million in 2013.
Net insurance revenue fell marginally to
$291.8 million from $293.5 million. Gross pre-
miums did improve to $474.2 million from
$450.7 million or by 5.2 per cent. However,
the amounts ceded to reinsurers rose by 19.4
per cent to $180.4 million from $151.2 million.
This disproportionate increase, along with
other adjustments, explains the modest
Other income rose to $90.4 million from
$79.90 million. Here, we note that admin-
istrative fees and commissions improved to
$33.1 million from $29.1 million. In addition,
the "other" category jumped from $7 million
in 2013 to almost $19 million last year; we
recall that on December 4, 2014, the AMBL
subsidiary, TATIL Life Assurance Ltd, sold its
500,000 shares in The Home Mortgage Bank,
realising an estimated non-taxable profit of
$15.36 million. This sale gave AMBL a useful
Net insurance benefits and claims rose by
2.8 per cent to $204.7 million from $199 mil-
lion previously. Meanwhile, interest expenses
fell by $5 million to $67.4 million. In addition,
provision from impairment of investments
swung by a healthy $21.6 million, moving
from $19 million in 2013 to a write back of
$2.6 million last year.
Along with a slightly higher provision for
loan losses, these changes saw net operating
income register at $430.2 million (2013: $504.6
Selling and administrative expenses con-
sumed $168 million versus $165.7 million in
Pre-tax profit came in at $262.2 million
compared with $338.9 million in the previous
year. After allowing for taxation of $54.1 million
(2013: $72.5 million), the after-tax figure was
$208.1 million versus $266.4 million.
Profit attributable to shareholders also reg-
istered at $208.1 million (2013: $266.4 mil-
These results translated into 2014 EPS of
$2.43 versus $3.11 for 2013.
Despite a small decline in operating income
the banking services division managed to gen-
erate higher pre-tax profit.
A 61 per cent decline in operating income
at the mutual funds segment eventually trans-
lated into a significant loss.
Both life and general insurance segments
experienced lower income and higher expens-
es, thus precipitating significantly lower profits
at both divisions. The life segment was the
hardest hit as its profits contracted by almost
74 per cent; it was in this segment that the
greatest reductions in equity values were sus-
Dividends and share price
Dividends for both fiscal 2013 and 2014
were unchanged at $1.00. At a recent ex-div-
idend price of $38.92, this share gives investors
a yield of 2.57 per cent. That price also rep-
resents a P/E multiple of 16.
Last Wednesday, there were outstanding
offers to sell at $40.00, at which price investors
would still enjoy a reasonable yield of 2.50
per cent; as noted later, there appears to be
some justification for a higher price.
The results for the first quarter showed a
100 per cent increase in EPS to $0.50 from
$0.25 in the 2014 comparative period.
The general insurance segment was the star
performer, increasing profits by 47 per cent.
The banking segment delivered $1.5 million
in higher profits.
Operating income at the mutual funds seg-
ment improved by 375 per cent, thus helping
to restore profitability to that unit.
Although still showing a loss, the life insur-
ance segment exhibited a significant reduction
in that position.
As reported in the Barbados Advocate news-
paper on March 30, 2015, AMBL s acquisition
of Consolidated Finance Company Ltd, based
in Barbados, is expected to be consummated
in the not-too-distant future.
There is a renewed emphasis on increasing
production and improving investment returns
at the TATIL Life subsidiary; this augurs well
for a stronger result as the year develops.
On a note of caution, the recent downgrades
for both the country and some state institu-
tions will have some impact on the valuations
of securities issued by those parties.
As a new insurance act makes its way
through the legislative process, there is an
opportunity for AMBL/TATIL group to par-
ticipate in the rationalising and inevitable
consolidation of the insurance sector, even
excluding any Clico-related entity that would
eventually form part of that process.
Domestic equity declines
impact AMBL's results
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