Home' Trinidad and Tobago Guardian : February 18th 2016 Contents RBC Caribbean, via its
continues to play a significant
role on the local financial
Last July, it sold its loss making operations
in Suriname to Republic Financial Holdings
Ltd. In the previous year, it sold its Jamaican
operations to Sagicor Group Jamaica Ltd.
Is this the start of its gradual exit from the
Caribbean? Or, does it represent a strategic
re- focussing on the re-building of its more
profitable (actually or potentially) units? Let
us hold that thought for a few moments.
As usual, we start by reviewing the group s
performance for its fiscal period ended October
Changes in financial position
The sale of its Suriname operations nega-
tively impacted three principal line items: cash
($1.58 billion), loans ($1.44 billion) and cus-
tomers deposits ($2.9 billion).
Total assets rose marginally to $84.6 billion
from $84.4 billion.
The largest component, loans and advances
to customers, fell to $37 billion from $38.7 bil-
lion. Even allowing for the Suriname trans-
action, this reflects an absolute decline of
about $260 million. ($38.7-37-1.44 = $0.26
At the gross level, all major segments exhib-
ited falls. Retail loans fell to $6.4 billion from
$6.8 billion while commercial or corporate
advances closed at $15.9 billion from $17 billion
and mortgages moved from $16.9 billion down
to $16.4 billion.
Investment securities balances rose to $13.5
billion from $12.97 billion. Within that category,
securities available for sale at fair value
advanced to $13 billion from $11.1 billion; the
major contributor to this change was its
increased exposure to government and state
owned enterprises debt securities, which rose
to $4.95 billion from $3.68 billion.
Cash and cash equivalents climbed by 16.2
per cent to $12.08 billion from $10.4 billion.
The largest increase was noted under its treas-
ury bills balances, which climbed to $3.9 billion
from $2.2 billion. In addition, sums due from
other banks rose to $7.13 billion from $6.52
billion. Only cash on hand fell to $1.07 billion
from $1.64 billion.
Balances with central banks rose to $9.3
billion from $8 billion. On the surface, this
increase contradicts the decline in customers
deposits, which we will talk about later.
Total liabilities declined slightly to $67.4
billion from $67.8 billion.
Customers deposits fell to $60.9 billion
from $62.3 billion. Only saving accounts exhib-
ited an increase, moving from $25.9 billion to
$26.1 billion. Both term deposits and current
account balances declined; the former moved
to $11.55 billion from $12.1 billion while the
latter closed at $23.22 billion from $24.26 bil-
In the context of the removal of $2.9 billion
in deposits due to the Suriname sale, this
movement reflects a net improvement of $1.5
billion ($60.9 -- ($62.3-2.9)).
In terms of sectorial sources of funds, the
major increase was recorded under "other",
which rose to $2.43 billion from $1.60 billion.
Funds from the state sector increased to $4.24
billion from $3.76 billion. Both retail consumers
and the private sector experienced declines in
their deposit holdings; the former moved to
$31.9 billion from $33.1 billion while the latter
fell to $22.3 billion from $23.8 billion.
Sums due to banks more than doubled to
$1.88 billion from $0.92 billion.
In a similar vein, amounts due to associates
and affiliated companies jumped to $1.67 billion
from $0.78 billion.
Total equity moved from $16.58 billion to
$17.21 billion, of which $767 million related to
Stockholders equity advanced to $16.44
billion from $15.92 billion.
The accumulated deficit improved to $1.52
billion from $1.97 billion. Here, the current
year s profit of $524.5 million boosted the
brought forward balance while the transfer to
statutory reserves of $84.1 million was the
major negative adjustment.
With 12,946,494 shares outstanding, each
share had a book value of $1,269.74 (October
2014: $1,230.00). Of course, all these shares
are now owned by the Royal Bank of Cana-
da.Interest income fell to $2.83 billion from
$3.12 billion while interest costs declined to
$352.5 million from $479.7 million. This resulted
in net interest income contracting by $166.4
million to $2.48 billion from the previous year s
$2.64 billion; only $88.6 million of the fall
could be attributed to the former Surinamese
Non-interest income improved to $1.49 bil-
lion from $1.47 billion. Here, fees and com-
missions registered at $1.05 billion from $997
million in 2014 while dividend income
improved by $1.9 million. Declines were record-
ed under foreign exchange earnings ($17.1 mil-
lion), net trading income ($14.1 million) and
sundry income ($11.8 million).
All expense items exhibited declines. Non-
interest expenses fell to $3.97 billion from
$4.12 billion. This decline mainly reflected
lower staff costs of $1.33 billion versus $1.78
billion in 2014.
Impairment losses on loans and advances
contracted to $356.1 million from $999.6 mil-
lion. All components of this net figure were
lower, in particular, the increase in allowance
for the year, which contracted to $66.5 million
from $711.3 million.
Impairment losses on investment securities
were reduced to zero from $1.9 million.
The share of profits from its four associates
fell to $6.3 million from $7.8 million. In con-
trast, its share of profits from its joint venture
(RGM Ltd) improved to $23.5 million from $19
These changes resulted in an improved pre-
tax profit of $780.8 million compared with a
loss of $246.1 million in 2014. At the after-
tax level, the 2015 profit came in at $767.8
million (2014: loss of $176.3 million).
After allowing for the discontinued loss-
making Suriname operations, the net profit
came in at $645.5 million versus 2014 s loss
of $753.8 million. This represents a positive
swing of nearly $1.4 billion, which exceeds
Canadian $250 million.
These results translated into 2015 EPS of
$49.86 compared with a loss of $58.22 for
In addition to its welcome return to modest
profitability, there were several positives for
the Trinidad bank. These included higher levels
of loans, deposits and cash.
Loan balances increased by 7.2 per cent to
$10.63 billion from $9.92 billion. Included in
these figures were mortgage balances of $2.75
billion versus 2014 s $2.43 billion; this reflected
a 13.05 per cent improvement.
Deposits increased by 4.9 per cent to $22.6
billion from $21.5 billion. The only sectorial
decline was noted under the state sector, which
fell to $873 million from $1.15 billion.
Year-end cash balances increased by 80.5
per cent to $3 billion from $1.66 billion. This
change was hugely helped by movements in
its investing activities; purchases of investment
securities fell to $7.8 billion from $8 billion
while proceeds from the sale and redemption
of investment securities rose to $9.16 billion
from $7.59 billion.
As it continues to lower its costs and allo-
cations to provisions, its profitability should
improve meaningfully in the current period
The investment management segment con-
tinues to make a very useful contribution to
the bottom line.
The table shows that operations outside of
Trinidad generated the greatest profit in 2015
while incurring the smallest loss in 2014. These
businesses include its subsidiaries in Barbados,
Bahamas, the Dutch and Eastern Caribbean.
Parent company's share price and
Over the period January 2, 2015 to December
31, 2015, RBC s share price in Toronto declined
from C$80.70 to C$74.15. During the year, the
price peaked at C$81.27 on April 20, 2015 and
closed on February 2, 2016 at C$70.08.
In calendar 2014, RBC paid quarterly div-
idends totalling C$2.84. These payments
improved by 8.5 per cent to C$3.08 in calendar
2015; at the recent closing price of C$70.08,
the yield was 4.4 per cent.
(Non-Canadian investors would have had
to content with the fall of the Canadian dollar
against the US dollar. Using Central Bank buy-
ing rates, the Canadian dollar depreciated from
TT$5.15 in January 2015 to TT$4.61 in Decem-
ber 2015. This is one of the risks of foreign
As disclosed in a recent interview, locally,
the bank is expanding its operations on several
fronts. These initiatives include extended open-
ing hours and mobile banking. Phone-based
payments and the opening of two new physical
branches are expected to be completed later
this year. These initiatives suggest that RBC
remains committed to the Caribbean region.
Also, the November 2015 agreement to sell
their trust, custody and fund administration
business in the Caribbean to SMP Group Ltd
is not expected to impact on its core Caribbean
(RBC s first quarter results to January 31,
2016 are expected out on February 24, 2016.)
Next week, we look at CIBC/First
Caribbean International Bank's 2015 per-
FEBRUARY 18 • 2016 www.guardian.co.tt BUSINESS GUARDIAN
COMMENTARY | BG15
RBC Caribbean exhibits greater
profitability outside of T&T
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