Home' Trinidad and Tobago Guardian : December 24th 2015 Contents DECEMBER 24 • 2015 www.guardian.co.tt BUSINESS GUARDIAN
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Republic Bank Ltd (RBL)
rounded off a very busy year
of acquisitions in Ghana and
Suriname by posting a mod-
est improvement in EPS. It
raised its final dividend to
Despite these successes, its share price
declined from the previous fiscal year s level.
Let us now review its results for the fiscal
period ended September 2015 in some more
Changes in financial position
Helped by two acquisitions, total assets rose
by 11.1 per cent or $6.6 billion to $66 billion
from $59.4 billion.
The acquisition of 100 per cent of RBC
Royal Bank Suriname NV contributed $3.3 bil-
lion while the 57.11 per cent of HFC Bank
(Ghana) Ltd enhanced its assets by $2.2 billion.
Consequently, pre-existing businesses added
only $1.1 billion of additional assets.
At $33 billion, net advances accounted for
half of RBL s assets in 2015; this represented
an increase of 21.8 per cent from the previous
years $27.1 billion.
Its three major lending categories are retail,
corporate and commercial and mortgages.
Retail balances grew to $5.9 billion from $5.2
billion while corporate and commercial loans
increased from $11.1 billion to $15 billion and
mortgages advanced to $12 billion from $10.7
In terms of country, T&T accounted for
62.4 per cent or $42 billion of total advances.
Small declines were noted in advances to the
Eastern Caribbean, United States and Europe.
Consistent with its new acquisitions, Suriname
now accounts for $2.64 billion while Ghana
balances stood at $2.14 billion; in 2014, there
was no recorded exposure to either country.
The three major industry sectors are gov-
ernment and central government bodies ($21
billion), personal ($15.1 billion) and the financial
sector (9.2 billion). Interestingly, even though
its percentage exposure to the energy and min-
ing sectors is fairly low, it climbed from less
than $0.5 billion in 2014 to $1.64 billion this
Its store of cash and near-cash items
advanced from $19.65 billion to $20.26 billion.
The cash component improved to $930.5 mil-
lion from $565.2 million. The largest compo-
nent amounts due from banks, declined to
$7.5 billion from $8.3 billion. Statutory deposits
with central banks increased to $5.6 billion
from $4.8 billion while its treasury bills holdings
rose to $6.2 billion from $5.9 billion.
Total liabilities rose by 11.8 per cent to $56.6
billion from $50.6 billion.
Balances held as customers deposits
increased by 13.6 per cent to $49.7 billion from
$43.8 billion as at year-end 2014. The largest
source, personal accounts, moved from $24.6
billion to this year s $27.4 billion. The corporate
and commercial sector rose to $12.9 billion
(26 per cent of the total) from $9.6 billion,
when it represented 22 per cent of last year s
Total equity improved from $8.75 billion to
$9.41 billion. Of this sum, $478.5 million related
to non-controlling interests, leaving share-
holders equity at $8.93 billion.
The largest component, retained earnings,
advanced from $5.79 billion to $6.36 billion.
Comprehensive income of $1.25 billion boosted
the opening balance while dividends of $687.6
million pulled down the closing figure.
Inclusive of stock options, 161,662,000
shares were outstanding at year-end 2015.
Each share had a book value of $55.27 versus
$52.19 as at September 2014.
Revenues and profits
Net interest income registered at $2.45 billion;
this was 10.6 per cent greater than 2014 s $2.22
Helped by higher loan balances, interest
income rose to $2.78 billion from $2.52 billion,
or by 10.2 per cent. Lower interest expenses
relating to debt securities in issue and other
fund raising instruments helped restrain the
growth in interest expense to 7.45 per cent;
this figure moved from $303.1 million to $325.7
Other income declined marginally to $1.46
billion from $1.49 billion.
One major declining component, gains from
the disposal of available-for-sale investments,
contracted to $26.9 million from 2014 s $341.7
million. In 2014, this line item was boosted by
the sale of its 24 per cent stake in the Home
Mortgage Bank to NIB, which netted $118 mil-
lion and the sale of its Visa International shares,
which contributed $210 million. On the other
hand, recoveries from written off loans
improved from $83 million in 2014 to $212.1
million. In addition, other fees and commission
income increased by 19 per cent to $589 million
from $495.5 million.
Operating expenses escalated by 13 per cent
to $2.12 billion from $1.88 billion. This surge
was spearheaded by staff costs increases of
14.7 per cent and a 15.4 per cent lift in general
administrative expenses. The former moved
from $701.9 million to $804.8 million, while
the latter climbed to $706.2 million from the
previous year s level of $611.8 million. Most of
these changes could be explained by the two
acquisitions, which contributed $89.4 million
to the overall increase.
After including $39.3 million, which was the
group s share of profit from its associates, the
operating profit registered at $1.83 billion; this
was 2.3 per cent lower than the $1.87 billion
recorded for 2014.
The goodwill impairment expense declined
to $31.5 million from the previous year s $185
million. The entire cost for 2015 related to its
Cayman Island subsidiary.
The net loan impairment expense increased
to $165.3 million from $119.9 million. $91 million
of this year s figure related to Ghana.
These movements allowed RBL to report a
pre-tax profit of $1.63 billion; this was 4.1 per
cent greater than the $1.57 billion earned for
The effective tax rate increased to 24.3 per
cent from 21.6 per cent, thus restraining its
after-tax profit to $1.24 billion; in 2014, this
result was $1.23 billion.
With lower sums being attributed to non-
controlling interests, the profit attributable to
shareholders registered at $1.22 billion; this is
an increase of 2.5 per cent over the 2014 figure
of $1.19 billion.
These results translated into diluted EPS of
$7.57 versus $7.39 for 2014.
All countries and groupings recorded higher
net interest income for 2015.
The other income line includes the share of
profits from associates, which only impacts
the T&T column.
Only Cayman, Suriname and the Eastern
Caribbean showed a sharp decline in operating
profit; this is consistent with difficult conditions
in those markets.
Fuelled by growth in the tourism sector, the
Barbados economy continues to improve, albeit
slowly. This environment has helped that sub-
sidiary produce a strong 96 per cent improve-
ment in pre-tax profit.
Also making a noteworthy contribution was
the Guyanese subsidiary, which increased its
pre-tax profits by 17.1 per cent.
In its first year as a subsidiary, GFC Bank
Ghana made a small operating profit. Out of
abundance of caution and to comply with
stricter Ghanaian regulations, RBL decided to
make adequate loan loss provisions at this new
subsidiary. This resulted in a loss for the current
period. It fully expects that this bank would
be profitable in 2016.
It is noteworthy that, allowing for the special
Ghanaian situation, three of the other four
country units had lower loan impairment costs
in 2015; in the local case, there was a small
Share price and dividend
The share price declined from $121.61 on
September 30, 2014 to $112.00 on September
30, 2015. Over that period, there have been
very few instances when the price has appre-
ciated by more than a few cents.
The price decline of $9.61 is more than twice
the dividend paid over the same period and
has investors feeling significantly poorer.
Based on the current year s dividend of $4.35,
the price of $112.00 gives investors a yield of
3.88 per cent.
The current slowdown in the local economy
will likely have some negative impact on the
bank. Unfortunately, none of its external sub-
sidiaries are sufficiently profitable to compensate
for any significantly lower local profit contri-
Perhaps, and with the benefit of hindsight,
it might be said that the steady decline in the
company s share price was a sure clue that the
economy has been in a sustained slowdown
for the better part of a year.
Very likely, as the New Year progresses, there
will be some significant re-alignment in the
ownership of the bank; hopefully, this change
would not be excessively disruptive to the
In the early part of January, it expects to
start operating under the umbrella of a holdings
company, Republic Financial Holdings Ltd.
This structure is expected to improve its use
of capital and facilitate better risk manage-
In February 2016, the company will install
a new managing director, Nigel Baptiste, who
is a seasoned insider. He will replace the out-
going David Dulal-Whiteway.
I extend warm Christmas greetings to all my
The Felix Pereira column will return to
the Sunday Business Guardian on January
Republic Bank's 2015 results
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