Home' Trinidad and Tobago Guardian : October 20th 2016 Contents OCTOBER 20 • 2016 www.guardian.co.tt BUSINESS GUARDIAN
COMMENTARY | BG15
Republic Bank Ltd owns 152.9
million shares (50.97 per cent)
in Republic Bank Guyana Ltd
(RBGL). The other major
shareholders are Demerara
Mutual Life with 16.3 million
shares (5.44 per cent) and Guyana and Trinidad
Mutual Fire and Life Group with 15.8 million
(5.27 per cent).
A fourth large shareholder, Trust Company
(Guyana) Ltd, increased its holdings from 17.97
million shares (5.99 per cent) in 2014 to 19.1
million shares in 2015, which now equates to
6.37 per cent of the total outstanding.
RBGL is the largest and most profitable bank
in Guyana and operates from 11 branches while
employing 655 persons. In 2015, the Guyana
operations accounted for pre-tax profits of
TT$130.4 million or about 8 per cent of the
parent company s total pre-tax result of
We will now review RBGL s performance for
the year ended September 2015.
Changes in financial position
Total assets grew by 10.4 per cent to G$142.4
billion from G$129 billion as at September
The largest component, loans and advances,
increased by 3.7 per cent to G$52.4 billion
from G$50.5 billion.
Here, growth was concentrated under the
mortgages category, which climbed to G$18.22
billion from G$16 billion; this reflected a gain
of 13.9 per cent. On the other hand, retail
lending declined to G$5.99 billion from G$6.1
billion. Corporate and commercial lending also
fell marginally to G$28.1 billion from G$28.4
billion. Aside from mortgages, its largest expo-
sures were to other services (G$10.2 billion),
distribution (G$6.4 billion) and personal (G$5.5
Its holdings of treasury bills increased to
G$43.1 billion from G$41.7 billion. All maturities
exhibited changes; in particular, those maturing
within six to 12 months climbed to G$13.8 bil-
lion from G$3.7 billion.
Investment securities rose from G$5.4 billion
to G$6.4 billion. The largest component was
corporate bonds of G$5.05 billion (2014: G$3.77
Statutory deposits with the Central Bank
increased from G$12.9 billion to G$14.27 billion;
this growth is consistent with higher deposit
balances from customers. Meanwhile, amounts
due from banks rose to G$15.8 billion from
G$8.6 billion. Here, the largest increase was
from the Bank of Guyana, which climbed to
G$8.5 billion from G$3.3 billion.
Cash and cash equivalents advanced to
G$2.22 billion from G$1.47 billion. This increase
was largely helped by cash provided from its
operating activities, which improved to G$13.1
billion from a negative G$3.2 billion. This was
aided by a huge increase in customers deposits.
Total liabilities rose by 10.2 per cent to
G$127.1 billion from G$115.4 billion.
The largest component, customers deposits,
rose to G$123.7 billion from G$112.6 billion or
by 9.9 per cent. Savings deposits accounted
for G$78.8 billion while demand deposits made
up G$38.3 billion and time deposits comprised
Interestingly, the largest increase was sourced
from the state sector, which climbed from
G$14.6 billion to G$22.4 billion; that escalation
was concentrated under the demand deposits
Other liabilities rose to G$2.28 billion from
G$1.94 billion. The two main contributors to
this increase were drafts and settlements and
accrued expenses. The former rose to G$1.15
billion from G$0.9 billion while the latter
closed at G$188.2 million from G$129 million.
Total equity increased from G$13.56 billion
to G$15.22 billion. Both the stated capital and
statutory reserves were unchanged at G$300
The largest component, retained earnings,
advanced from G$10.36 billion to G$12.37 bil-
lion. The current year s comprehensive profit
contributed G$2.83 billion while a transfer
from a general banking risk reserve added
G$207.8 million. Dividends to shareholders of
G$1.03 billion reduced the closing balance.
With 300,000,000 shares outstanding, each
share had a book value of G$50.75 (September
Income and profits
Total income improved to G$9.25 billion
from G$8.28 billion or by 11.7 per cent. Interest
income rose by 4.8 per cent to G$7.13 billion
from G$6.81 billion.
All income streams exhibited gains. Advances
improved from G$5.5 billion to G$5.7 billion
while interest from investments rose to G$418
million from G$371 million and interest from
liquid assets ended at G$977.8 million from
G$898.5 million. Meanwhile, interest expense
fell to G$589.8 million from G$657.3 million.
These changes resulted in net interest income
of G$6.54 billion versus G$6.15 billion for 2014.
Other income rose by a robust 27.2 per cent
to G$2.71 billion from G$2.13 billion. The major
contributor to this increase was the gains on
the sale of premises and equipment, which
registered at G$436.9 million.
Total expenses increased from G$4.66 billion
to G$4.95 billion or by 6.3 per cent.
Net loan impairment expenses fell to G$574.2
million from G$656.5 million. On the other
hand, operating expenses rose to G$4.37 billion
from G$3.99 billion or by 9.4 per cent.
Staff costs rose by 10.3 per cent to G$1.79
billion from G$1.62 billion. In line with higher
profits, staff profit sharing increased by 39.4
per cent to G$302.3 million from G$216.8 mil-
General administrative expenses came in at
G$757.1 million or 8.5 per cent greater than
the G$697.9 million recorded for 2014. Both
property related expenses and property tax
increased; the former moving from G$625.8
million to G$647.2 million while the latter
closed at G$136.6 million from G$122.3 mil-
The changes saw pre-tax profit register at
G$4.3 billion (2014: G$3.62 billion).
Tax expenses came in at G$1.49 billion ver-
sus G$1.28 billion. Although the statutory tax
rate was 40 per cent for both periods, the
effective tax rate declined from 35.4 per cent
in 2014 to 34.5 per cent in 2015. In the current
period, tax exempt income reduced the liability
by G$232.7 million while the gain on the sale
of premises and equipment lowered the charge
by another G$64.4 million.
These movements resulted in a net profit
of G$2.82 billion (2014: G$2.34 billion).
These results translated into 2015 EPS of
G$9.39 compared with G$7.80 for 2014.
RBGL treats its entire operations as one
banking unit; consequently, it does not sep-
arate, for example retail, commercial and
investment segments. Its only segmentation
is by geographic region. Its operations outside
of Guyana are of an investment nature.
Although the Guyanese economy grew in
2015, that growth was much less than it expe-
rienced in 2014, when it registered 3.8 per
cent. An uncertain political climate also con-
tributed to this result.
In 2015, production of gold, bauxite and
forestry products declined. One bright spot
is the prospect of Guyana becoming an oil
producer in the coming years.
Share price and dividends
After closing at G$125 on September 2014,
RBGL s share price fell to G$115.00 at the end
of September 2015 and ended at G$106.90 on
September 26, 2016. More recently, it closed
at G$105 on October 10, 2016.
Dividends rose from G$3.43 for 2014 to
G$3.93 for fiscal 2015. Based on its strong
half-year results to June 2016, the interim div-
idend was increased from G$1.10 in 2015 to
G$1.28 this year.
Relating the trailing dividend of G$4.11 (final
2015 dividend of G$2.83 plus interim 2016
dividend of G$1.28) to the most recent price
of G$105.00 gives investors a yield of 3.91 per
cent. Using 2016 12-months trailing EPS of
G$10.01, that price also reflects a P/E multiple
RBGL s revenues for the third quarter ending
June 2016 showed a 6.8 per cent improvement
to G$7 billion from G$6.56 billion. After-tax
profit rose by 9.7 per cent to G$2.1 billion
from G$1.93 billion. This results translated
into EPS of G$7.06 versus G$6.44 for the
comparative 2015 session.
Total assets rose to G$151.3 billion from
G$142.4 billion as at September 2015. The
major component, loans and advances, rose
by 8.2 per cent to G$56.67 billion from last
September s G$52.4 billion.
Liabilities increased by 6.3 per cent to
G$135.2 billion from G$127.1 billion as at Sep-
tember 2015. Here, customers deposits
advanced by 6.5 per cent to G$131.7 billion
from last year-end s G$123.7 billion.
Shareholders equity also improved to
G$16.15 billion from G$15.22 billion last Sep-
Considering that the parent company,
Republic Financial Holdings Ltd (RFHL), holds
slightly under 51 per cent of the total RBGL s
equity, Guyana s operations now equate to
TT$103.4 million pre-tax profits, which rep-
resents about 8.34 per cent of RFHL s total
pre-tax profit of TT$1.24 billion for the nine
months to June 2016.
Anticipating increased activity in the hydro-
carbons sector, it is expected that the Guyanese
economy will undergo a rapid economic trans-
formation in the coming years; would RFHL
still be content to keep its shareholding at the
present level? Or, will it seek to attain full
In May 2016, we saw that an attempt to
acquire full ownership of its 51 per cent sub-
sidiary, Republic Bank Grenada Ltd, was not
entirely successful. Over the past five years
that subsidiary s EPS ranged from EC$5.20 in
2012 to a loss of EC$3.96 in 2013. In 2015, the
EPS was EC$2.24 and it paid a dividend of
The offer price for the Grenadian subsidiary
was EC$45.00 per share; after the offer closed
in June 2016, RFHL s stake increased to 70
per cent; well short of its original target.
How will that setback guide its approach
if it eventually decides to increase its ownership
in its Guyanese operations?
Next week, we turn our attention to
Proven Investments Ltd.
Is Republic Bank Guyana Ltd
poised to take off?Felix Pereira
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