Home' Trinidad and Tobago Guardian : February 9th 2017 Contents FEBRUARY 9 • 2017 guardian.co.tt BUSINESS GUARDIAN
STOCKS | BG15
First Citizens 2016 results
The First Citizens Banking
Group (FIRST) reported mar-
ginally improved EPS for its
fiscal year ended September
2016; we will now review what
elements contributed to this
Changes in financial position
Total assets increased by 3.5 per cent to
$38.85 billion from $37.54 billion.
Net loans to customers fell to $13.33 billion
from $13.83 billion. The most notable decline
was advances to the construction sector, which
fell to $2.44 billion from $3.87 billion, reflect-
ing a contraction of 37 per cent; this is con-
sistent with the state of the general economy
In contrast, real estate mortgages advanced
by 17.6 per cent to $3.4 billion from $2.9 billion.
Advances to the finance, insurance and real
estate market rose by 25 per cent to $1.7 billion
from $1.36 billion. Meanwhile, consumer loans
edged up to $2.59 billion from $2.38 billion.
Other loans and receivables climbed by 62
per cent to $2.05 billion from $1.26 billion.
Here, the largest increase was shown under
advances to corporate clients, which gross
amount moved from $1.25 billion to $2.04
Loan notes contracted to a modest $442.2
million from $2.16 billion. The most significant
reduction was the March 2016 CBTT repay-
ment of the items relating to Clico Investment
Bank, which totalled $1.64 billion. Balances
from Taurus Services Ltd closed at $411 million
from $479 million.
Available-for-sale financial assets rose to
$11.5 billion from $10.6 billion. Most of this
increase was concentrated under listed and
unlisted debt securities, which advanced to
$11.4 billion from $10.4 billion.
Property, plant and equipment rose to $542.2
million from $486.3 million. Additions of $115
million drove this increase while depreciation
charges and reclassifications restrained the
Cash and due from banks more than doubled
to $4.71 billion from $2.22 billion. Short-term
investments climbed to $1.94 billion from
$0.62 billion. The cash and bank balances
component closed at $2.77 billion from $1.6
billion. This increase was heavily influenced
by larger cash flows from operating activities,
which was swayed by lower loans to customers
and higher deposit levels.
Total liabilities rose to $32.2 billion from
Customers' deposits climbed by 19.2 per
cent to $25 billion from $21 billion. The largest
growth was shown under deposits from public
institutions, which rose to $8.4 billion from $6
billion or by 40.3 per cent. Funds from private
institutions advanced to $8.44 billion from $7
billion or by 20.5 per cent. Finally, consumer
deposits were little changed, moving from $8
billion to $8.18 billion.
Other funding instruments declined to $4.5
billion from $4.75 billion. Repurchase agree-
ments fell to $4.2 billion from $4.7 billion. A
new item was a US dollar fixed rate note of
$247.4 million. $2.65 billion or 59 per cent of
these total funds were sourced from consumers
and private institutions.
Bonds payable declined to $1.4 billion from
$1.93 billion. After settling bonds totalling
$1.43 billion, a new unsecured $900 million
bond was issued on October 2015. This debt
has a tenor of 7 years and carries a coupon of
4.25 per cent.
Creditors and accrued expenses contracted
to $453 million from $2.97 billion. This largely
related to the payment to NGC for the proceeds
of $2.69 billion from the TTNGL IPO.
Total shareholders' equity improved to $6.68
billion from $6.33 billion.
The main component, retained earnings,
rose to $4.2 billion from $3.93 billion. Here,
the current year's profit of $637.2 million add-
ed to the brought forward balance. The major
reductions from this figure were dividends to
shareholders of $354.8 million and a $2 million
transfer to the statutory reserves.
With 251,353,562 ordinary shares outstand-
ing, each share had a book value of $26.57 ver-
sus $25.17 as at September 2015.
Revenues and profit
Total net income closed at almost $2 billion
from $1.76 billion, reflecting an increase of 13.2
The net interest income component im-
proved to $1.28 billion from $1.17 billion. The
interest income element rose to $1.55 billion
from $1.45 billion. Interest on loans to cus-
tomers increased to $882 million from $838
million while interest on financial assets rose
to $610 million from $525 million. In contrast,
interest on loan notes fell to $60 million from
Interest expenses declined to $267.8 mil-
lion from $281.6 million. Significantly, interest
on customers' deposits rose to $79.2 million
from $71.1 million; this mainly reflected high-
er volumes of deposits, not necessarily rates
of interest! Interest on bonds payable fell to
$75.2 million from $105.7 million; this decline
is consistent with the lower values outstanding.
Fees and commissions closed at $430.7 mil-
lion from $414.8 million. Only portfolio and
other management fees declined to $222.7 mil-
lion from $226.7 million. Credit-related fees
climbed to $45.3 million from $29.6 million,
or by 53.1 per cent. Transaction service fees
and commissions closed at $162.7 million from
Net gains from investment securities im-
proved to $36.5 million from $27.5 million or
by 33 per cent. Other income climbed by 60.4
per cent to $244.1 million from $152.2 million.
This improvement was driven by foreign ex-
change transaction gains of $141.2 million and
$85.1 million in foreign exchange translation
gains. As the TT dollar depreciates, the latter
will become more prominent.
Total expenses increased by 20.7 per cent to
$1.19 billion from $988.6 million.
Net loan impairment cost swelled to $87
million from $6 million. This increase was in-
fluenced by the higher charge of $89.3 million
and the lower recoveries ($4.9 million). Both
variables were probably influenced by a weaker
Administrative expenses rose by 17.8 per
cent to $700.5 million from $594.4 million.
The wages and salaries component rose by
21 per cent to $514 million from $425 million,
reflecting a recent trade union settlement.
Depreciation rose to $73 million from $66.2
million; this increase reflected higher fixed
assets in place.
Other operating expenses increased to $407
million from $390 million, or by 4.4 per cent.
These changes resulted in an operating profit
of $801.5 million, which was 3.4 per cent high-
er than the $774.4 million recorded for 2015.
The share of profit in its associate, St Lucia
Electricity Services Ltd, fell marginally to $11.7
million from $12.3 million. Next, the share of
profit from its joint ventures in Infolink Ser-
vices and T&T Interbank Payment System Ltd
increased to $4.2 million from $3.7 million.
These movements saw pre-tax profit close
at $817.4 million from $790.8 million.
The effective tax rate increased from 20.3
per cent to 22.04 per cent. In the current year,
tax exempt income fell to $65.5 million from
$73.2 million. Also, there was a $5.2 million
under-provision. These changes contributed
to a 2016 tax payment of $180.2 million (2015:
$160.3 million). Consequently, the bottom
line for the current year showed a net profit
of $637.2 million versus $630.4 million.
These results translated to EPS of $2.52
compared with $2.50 for 2015.
The retail banking division registered an 8
per cent increase in total income. However,
high loan impairment, administrative expenses
(up by 25 per cent) and operating expenses (up
by 21 per cent) negated this improvement. This
division tends to be the most labour-intensive
part of its operation.
The corporate banking unit recorded a 25
per cent revenue improvement. Despite a dou-
bling of its loan loss expense and a 69 per cent
increase in total expenses, the pre-tax figure
improved by 63 per cent.
At treasury and investment banking, total
income declined by $347 million. In 2015, the
gross figure was boosted by other income of
$701 million; in 2016, this line item contribut-
ed a more subdued $258 million. In addition,
loan impairment charges jumped to $56 million
from $2.1 million. The net result was that pre-
tax income declined by 49 per cent.
At the trustee and asset management seg-
ment, total income was little changed. The
decline in pre-tax profits was largely attrib-
utable to the increases in both administrative
and operating expenses.
Although the group operates in five jurisdic-
tions, no territorial break-down of revenues,
profit, assets and liabilities is provided in the
Share price and dividends
FIRST's share price closed at $35.00 at both
its year-end 2015 and 2016. During calendar
2016, it was traded at a low point of $29.50
on May 20, 2016.
Its recent price weakness, to as low as $32.50,
might probably reflect either a cautious an-
ticipation of a sub-par result for Q1 2017 or
the expectation that the GORTT will soon an-
nounce plans to divest itself of a further block
of shares in this company. The share closed
last Friday at $32.50.
Total dividends for 2015 were $1.32 and this
was increased marginally to $1.33 for fiscal
At those recent prices, the yield is 4.1 per
cent and the P/E multiple is 12.8. That price
also represents a 22 per cent premium over its
book value of $26.57.
Shareholders have been given notice that
a special meeting of the company is carded
for Thursday February 16, 2017. FIRST's first
quarter report to December 2016 should be
released very soon and that document would
guide investor's short-term expectations for
In the next article, we will review RBC Financial
(Caribbean) Ltd 2016 results.
Total net income closed
at almost $2 billion from
$1.76 billion, reflecting
an increase of 13.2 per cent.
Links Archive February 8th 2017 February 10th 2017 Navigation Previous Page Next Page