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BUSINESS GUARDIAN guardian.co.tt MARCH 2 • 2017
Scotiabank T&T Ltd 2016 results
While operating in an
economy, which ex-
signs of weakness,
Scotiabank T&T Ltd
(SBTT) reported im-
proved results and maintained its dividend.
Today, we focus on SBTT's results for its fiscal
year ended October 31, 2016.
Changes in financial position
Total assets advanced by 4.8 per cent to
$23.22 billion from $22.16 billion.
Net loans to customers increased by 1.4 per
cent to $13.3 billion from $13.1 billion. Its two
largest exposures were residential mortgages
and consumer loans, both of which experi-
enced useful gains; the former rose by 6.7 per
cent to $5.6 billion from $5.2 billion while the
latter advanced by 14.6 per cent to $4.6 billion
from $4.0 billion.
Notably, advances to the manufacturing and
assembly sector more than doubled to $680.4
million from $331.6 million. Similarly, loans
to the distributive trade increased by 7.7 per
cent to $863.7 million from $802.2 million.
Negating these gains, advances to the con-
struction and engineering sector fell to $143.5
million from $1.04 billion, reflecting a decline
of 86.2 per cent. In addition, loans to the energy
and petrochemical sector contracted by 39 per
cent to $522.6 million from $850.7 million.
These shifts seem to reflect both the bank's
relative focus and the general state of the local
Investment securities rose by 3.0 per cent
to $2.27 billion from $2.2 billion. The largest
component, available-for-sale securities,
advanced to $2.16 billion from $2.08 billion.
Within this classification, all elements exhib-
ited gains; corporate debt securities closed at
$1.07 billion from $1.02 billion.
Deposits with the Central Bank edged up to
$3.2 billion from $3.1 billion. However, treasury
bills expanded by 68 per cent to $3.07 billion
from $1.82 billion; included in this figure is
$503.1 million in US treasury bills.
Cash from banks and related companies fell
to $880.4 million from $1.5 billion. Here, the
major decline was recorded under sums due
from other banks, which fell to $411.6 million
from $1.09 billion.
Property, plant and equipment declined
marginally to $251 million from $251.6 million.
The largest component of $112.7 million (or, 45
per cent) is shown under buildings.
Its deferred tax position improved to an asset
of $10.6 million (2015: liability of $31.1 million).
Cash balances expanded to $146.2 million
from $115.3 million. Contributing to this im-
provement was the decline in financing ac-
tivities, which fell by $424 million.
Total liabilities increased by 5 per cent to
$19.35 billion from $18.42 billion.
Customers' deposits rose by 4.4 per cent to
$17.6 billion from $16.8 billion. Deposits from
financial institutions fell to $551 million from
$624.3 million. In contrast, personal deposits
rose by 3.3 per cent to $11.4 billion from $11.06
In addition, funds from commercial estab-
lishments grew by 8.7 per cent to $5.6 billion
from $5.15 billion.
Policyholders' funds rose by 11.6 per cent to
$1.23 billion from $1.1 billion. Here, individual
annuities expanded by 10.4 per cent to $620.1
million from $561.6 million while non-par-
ticipating whole life policies grew by 13.2 per
cent to $568.6 million from $502.2 million.
Its liabilities under the defined benefit pen-
sion and other post-employment obligations
declined to $105.7 million from $138.4 million.
The bulk of this liability reflected post-em-
ployment medical and life benefits, which
closed at $124.9 million from $126.9 million.
However, this figure was reduced by a cred-
it of $19.3 million, which reflected the excess
of the fair value of the pension plan ($710.4
million) over the present value of the plan's
future obligations of $691.1 million.
Total shareholders' equity rose to $3.87 bil-
lion from $3.73 billion.
The retained earnings component closed at
$2.93 billion from $2.83 billion. The brought
forward balanced was enhanced by $625.2 mil-
lion from the current year's profit and a further
$36.6 million from the re-measurement of the
defined benefit liability. Meanwhile, dividends
to shareholders of $529 million together with a
$30.3 million transfer to the statutory reserve
lowered the closing balance.
The investment valuation reserve moved
from a negative $2.5 million to a positive $3.2
million. This swing reflected the upward re-
valuation of available-for-sale investments
by $5.7 million.
With the addition of the $30.3 million from
retained earnings, the statutory reserve fund
closed at $667.9 million from $637.5 million. Its
share capital was unchanged at $267.56 million.
Having 176,343,750 shares outstanding, the
book value of each share improved to $21.97
from $21.18 as at year-end 2015.
Revenues and profit
Net interest income expanded by 15.8 per
cent to $1.13 billion from $974.6 million.
The interest income component rose to $1.15
billion from $1.0 billion or by 13.9 per cent.
Interest on loans and receivables grew to $1.05
billion from $943.7 million, reflecting a 11.5
per cent improvement.
Also, interest on investment securities
jumped by 55.6 per cent to $91 million from
$58.5 million; this improvement reflected
higher yields on short- to medium-term in-
Interest expenses declined to $17.4 million
from $31.6 million. Here, interest on custom-
ers' deposits rose to $17.4 million from $15.4
million; this reflected higher deposit balances.
In addition, with no debt securities in issue,
interest on debt securities registered at zero
from $16.1 million.
Other net income declined by 3.6 per cent
to $479.2 million from $497.3 million. The
other income component dropped to $553
million from $560.7 million. However, net
trading income rose to $209.3 million from
$201 million. In contrast, fees, commissions
and net premium income fell to $342.4 million
from $353.9 million.
Within this grouping, net insurance premi-
ums sank to $79.5 million from $99.9 million.
Also, trustee and other fiduciary fees contract-
ed to $1.2 million from $5.8 million.
These changes resulted in total net income
closing at $1.61 billion, which was 9.3 per cent
greater than the $1.47 billion recorded for 2015.
Total non-interest expenses rose by 5.4 per
cent to $691.5 million from $656.1 million. The
salaries and other staff benefits component
declined marginally to $250 million from $251.3
Similarly, premises and technology costs
closed at $128.2 million from $135.1 million.
In contrast, communications and marketing
expenses rose by 10.9 per cent to $98.3 mil-
lion from $88.6 million. Also, other expenses
climbed by 18.8 per cent to $215 million from
In line with more difficult economic condi-
tions, the loan loss reserve climbed from $38.6
million to $76.8 million. The current impair-
ment charge rose by 57 per cent to $97.7 million
(2015: $62.3 million) while recoveries declined
to $21 million from $23.7 million.
These changes resulted in a pre-tax profit
of $840 million; this was 8.1 per cent greater
than the $777.3 million recorded for 2015.
The effective tax rate improved to 25.5 per
cent from 2015's 27.2 per cent. In 2015, there
was an additional charge of almost $19 million
relating to prior years. Consequently, income
tax expenses closed at $214.8 million from
These changes resulted in the net profit at-
tributable to shareholders improving by 10.4
per cent to $625.2 million from $566.1 million.
These results translated to EPS of $3.55 com-
pared with $3.21 for 2015.
The largest segment, retail, corporate and
commercial banking, generated 11.8 per cent
higher revenues and delivered 13.1 per cent
larger pre-tax profits. This huge segment ac-
counted for almost 85 per cent of the bank's
total pre-tax income.
The retail sub-division improved its mar-
ket penetration by increasing its reliance on
technology and streamlining its processes. The
sale of mutual funds is now part of the retail
The corporate and commercial sub-divi-
sion participated as a joint book runner for
the heavily oversubscribed issue by Trinidad
Generation Unlimited for its US$600 million
Both revenues and pre-tax profit were lower
at the insurance segment. Despite this, poli-
cyholders' funds rose by 11.6 per cent to $1.23
billion. Measured by gross annual premiums,
ScotiaLife T&T Ltd is the third largest life in-
surer operating in the local market.
Share price and dividends
SBTT's share price settled at $62.50 on Octo-
ber 30, 2015. From that base, it drifted steadily
downward and on June 10, 2016, it closed at
its low point of $51.36. From that level, the
price moved in a generally positive direction
before ending at $58.75 on October 31, 2016.
For most of the subsequent period, the share
price has moved within a very narrow range
of a few cents or so.
However, on February 21, 2017, the price
fell by $1.25 to $57.50. Very quickly, this loss
was mostly recovered on the next trading day;
eventually, the share price closed at $58.34 last
The total dividend for both 2015 and 2016
was unchanged at $3.00. That payment reflects
a pay-out ratio of more than 84 per cent of its
current EPS of $3.55.
At the recent price of $58.34 the yield is a
very attractive 5.14 per cent. That price also
corresponds to a price to book multiple of 2.66.
Its first quarter results to January 2017, which
release is imminent, include the robust con-
sumer spending seasons of Christmas and
pre-Carnival. This should have resulted in
higher loan activity and lead to a meaningful
Against that background, the recent price
see-saws probably reflected some investors'
uncertainty about the current result.
In the next article, we will review FirstCaribbean
International Bank Ltd's 2016 results.
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