Home' Trinidad and Tobago Guardian : March 3rd 2016 Contents MARCH 3 • 2016 www.guardian.co.tt BUSINESS GUARDIAN
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The local subsidiary of Scotia-
bank (SBTT) recorded growth
in many areas of its operations,
in particular, loans for new
autos, consumer purchases and
to the energy-related sector.
Let us now review the bank s performance
for its fiscal period ended October 2015.
Changes in financial position
Total assets climbed by 7.1 per cent to
$22.16 billion from $20.68 billion.
The loans component expanded to $13.1
billion from $11.8 billion, representing an
improvement of 10.8 per cent. Three major
areas were responsible for most of the increas-
es.Residential mortgage exposures climbed
by 7.2 per cent to close at $5.23 billion from
last year s $4.88 billion. A significant increase
was recorded under consumer loans, which
expanded by 22 per cent to reach $4 billion
from last period s $6.3 billion.
The construction and engineering sector
moved from a low base of $184 million to
$1.04 billion; in part, this reflected its new
partnership with Trinidad Offshore Fabricators
Company Ltd (Tofco), which has a current
contract for the fabrication of BPTT s Juniper
Among its declining loan exposures, three
deserve some mention. Net loans to the dis-
tributive trades contracted to $802 million
from $956 million in 2014; in the light of
current economic challenges, this may be
viewed as a prescient development.
Both communications and transport and
manufacturing and assembly also exhibited
lower exposures. The former declined by
more than half to $125 million from $256 mil-
lion while the latter moved from $515 million
down to $332 million.
The value of investment securities climbed
to $2.2 billion from $1.57 billion. The changes
reflected the combination of a reduction in
its holdings of government and state-owned
enterprises debt by $394.5 million accom-
panied by an increase of $1.02 billion in cor-
porate debt securities.
All four components of cash and related
items exhibited declines. Cash declined to
$115.3 million from $127.8 million while sums
due from banks and related companies moved
from $1.61 billion to $1.5 billion.
In addition, treasury bills balances moved
from $1.88 billion down to $1.82 billion. In
this case, Government of T&T treasuries fell
to $1.41 billion from $1.5 billion while those
issued by the Government of USA advanced
to $413 million from $380 million; even with-
out further action, the latter is likely to
increase as the TT dollar gradually depreciates
against the US dollar.
Finally, deposits with the Central Bank fell
to $3.1 billion from $3.33 billion. Other reserves
generated the largest decline, moving to $662
million from $990 million.
Total liabilities rose by 7.4 per cent to $18.42
billion from $17.15 billion. Within this category,
customers deposits advanced to $16.84 billion
from $15.21 billion or by 10.7 per cent.
The biggest percentage increase was noted
under funds contributed by the commercial
sector, which grew to $5.15 billion from $4.48
billion, or by 15 per cent. Personal deposits
were still the largest component; these
increased by 9.1 per cent to $11.05 billion
from $10.13 billion.
Funds from other sources stood at $624
million (2014: $592 million).
During the year, SBTT repaid its outstand-
ing debt; this resulted in this line item moving
from $618 million in 2014 to zero.
In line with its increased underwriting
activity, policyholders funds rose to $1.1
billion from $909 million in 2014. Both non-
participating ordinary life and individual
annuities exhibited growth. The former moved
to $502.2 million from $408.2 million while
the latter closed at $561.6 million from 2014 s
Stockholders equity advanced to $3.74 bil-
lion from $3.53 billion.
The retained earnings component improved
to $2.83 billion from $2.65 billion. The major
positive contributors were the current year s
profit of $566.1 million while $10.5 million
related to the re-measurement of the defined
benefit pension liability.
These additions to the brought forward
balance were reduced by dividends of $335
million and a net transfer to statutory reserves
of $55 million.
Having 176,343,750 shares outstanding,
each share had a book value of $21.18 (October
Income and profits
Total interest income advanced by 6.9 per
cent to $1 billion from the comparative 2014
outturn of $941 million. The largest compo-
nent, interest on loans and receivables, rose
to $943.7 million from 2014 s $884.7 million.
The remainder mostly represents investment-
Total interest expense fell to $31.6 million
from $52.2 million. Interest on customers
deposits rose anaemically to $15.4 million
from $15 million. On the other hand, interest
on debt security in issue fell to $16.4 million
from $36.7 million; this reflected the early
repayment of its $618 million debt.
These changes saw net interest income
improve to $974.6 million from $888.9 million,
or by 9.6 per cent.
Net other income rose marginally to $497.3
million from $493.8 million. The 2014 figure
was helped by the sale of its shares in The
Home Mortgage Bank, which contributed $43
The major component was fee, commission
and net premium income, which registered
at $353.9 million (2014: $344.1 million.) With
this grouping, net premium income was $99.9
million versus $88.8 million for 2014. The
other large component was net trading income
of $201 million (2014: $191.1 million). Fee and
commission expense rose to $63.4 million
from $47.2 million.
Total interest and other income came in
at $1.47 billion; this was 6.5 per cent greater
than the $1.38 billion registered for 2014.
Total non-interest expenses for 2015 were
$656.1 million compared with $638.8 million,
representing an increase of 2.7 per cent. Of
the four categories, only other expenses exhib-
ited a small decline, moving from $187.2 mil-
lion to $181 million.
Loan loss expenses increased by more than
$10 million to close at $38.6 million; the 2014
figure was $28.4 million. The charge for the
year increased from $55.3 million to $62.3
million while the recoveries declined to $23.7
million from $26.9 million.
These changes saw pre-tax profit register
at $777.3 million. This was 8.6 per cent greater
than the $715.5 million recorded for 2014.
The effective rate of tax increased to 27.1
per cent from 2014 s 21.7 per cent. The major
increases related to a prior years adjustment
of $19 million and a negative swing of $21.8
million for the effects of non-deductible costs
and non-taxable income.
The net profit attributable to shareholders
came in at $566.1 million versus $559.9 million
for 2014. These results translated into 2015
EPS of $3.21 compared with $3.18 for 2014.
The management discussion and analysis
gave many useful comments on several major
items. However, it did not place those com-
ments within the context of the disclosed
divisional performance. We were given a mere
four data points, which were insufficient to
provide a basis for insightful comment.
In the case of its insurance operations, we
learn that net premiums increased from $88.8
million to $99.9 million last year. With total
insurance revenues for 2015 registering at
$163 million, this means that investment and
other income was $63.1 million. We are not
given either its underwriting or its investment
profit, which are the two main profit streams
At the trust and merchant banking seg-
ment, both revenues and pre-tax profit
declined. No attempt is made to place these
changes into context or explain.
The main retail, corporate and commercial
banking segment delivered both higher rev-
enues and greater profit than the previous
year. The bulk of these results related to the
bank on a stand-alone basis.
For example, the core bank contributed
$1.293 billion out of the $1.295 billion in rev-
enues. Similarly, substantially all of its pre-
tax profit of $627.7 million related to the core
Unfortunately, companies have considerable
leeway as to which items of income or expen-
diture they can break out for further com-
parison, explanation and comment.
It would have been more helpful if the
retail operations were separated from the cor-
porate and commercial activities. In addition,
greater detail could have been provided, such
as the major components of both revenue
and expenses by individual segment.
As recently as 2013, SBTT did break-out
its retail banking operations separately. In
addition, it listed fees and commissions,
retirement benefit cost and depreciation by
segment. Perhaps, they will resume and com-
prehensively expand this practice in the cur-
rent reporting periods? (Simply copy the
Dividends and share price
The total regular dividend for fiscal 2015
was $1.90, which was unchanged from 2014.
In addition, a special dividend of $1.10 was
paid for 2015, which boosted the total to
$3.00. With retained earnings exceeding $2.8
billion, this type of payment may become a
regular feature until core profits start to
improve at a more robust pace.
Over the one-year period, October 2014
to October 2015, SBTT s share price rose from
$57.98 to $62.50. However, since then and
despite the special dividend of $1.10, the
share price has been on a consistent
Very likely, this slide is related to the current
cautious consumer demand and the fallout
from low energy prices. Perhaps, further
declines are imminent before the share, once
again, becomes an attractive "buy"?
Relating the regular dividend of $1.90 to
the recent closing price of $59.75, we derive
a yield of 3.18 per cent.
The market s anticipation of challenging
Q1 results seems to be underpinning the per-
sistent decline in SBTT s share price. If the
quarterly dividend is improved, the downward
slide in its share price may be arrested.
Next week, we will examine how First Cit-
izens Bank generated its 2015 results.
Scotiabank T&T's 2015 results
The core bank contributed
$1.293 billion out of the
$1.295 billion in revenues.
Similarly, substantially all
of its pre-tax profit of
$627.7 million related to
the core bank.
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