Home' Trinidad and Tobago Guardian : March 9th 2017 Contents MARCH 9 • 2017 guardian.co.tt BUSINESS GUARDIAN
STOCKS | BG15
Is FCI poised for growth?
Even when it was allocating huge
sums to both asset and loan im-
pairments over a multi-year
period, CIBC FirstCaribbean
International Bank Ltd (FCI)
continued to pay a dividend of
US$0.03. Starting in 2015, FCI began to show
meaningful profit gains.
We will now review FCI's results for the year
ended October 31, 2016.
Changes in financial position
Total assets rose by 2.6 per cent to US$10.97
billion from US$10.69 billion.
Loans and advances to customers grew by
3.5 per cent to US$6.21 billion from US$6.0
billion. Advances to business and sovereign
entities expanded by 5.4 per cent to US$3.65
billion from US$3.46 billion. Personal loans
increased to US$517.8 million from US$495.8
million or by 4.6 per cent. At US$2.02 billion,
mortgages were unchanged for both periods.
While top-line growth was evident, a sig-
nificant contribution to these changes was the
reduction in provisions for loan losses. For ex-
ample, under business and sovereign debt, this
line item fell to US$118.8 million from US$151.5
million. Similarly, under mortgages, this item
declined from US$147.8 million to US$129.2
million. Under personal loans, the contraction
was minimal, moving from US$50.9 million
down to US$50.8 million.
Investment securities fell to US$2.20 billion
from US$2.33 billion. Government debt secu-
rities declined to US$1.24 billion from US$1.58
billion. In contrast, other debt securities rose
to US$946.6 million from US$737.2 million.
The net increase in property and equipment
to US$153.9 million from US$139.7 million
largely comprised total purchases of US$33.8
million. The bulk of this reflected additions
totalling US$29.3 million under furniture,
equipment and vehicles. Of the total net book
value of US$81.3 million under this catego-
ry, US$32.95 million reflects expenditure on
system development costs and work-in-pro-
gress, which have not yet attracted depreci-
Retirement benefit assets rose to US$76.8
million from US$39.9 million; this improve-
ment reflected the growth in the defined ben-
efit plan assets, which climbed faster than the
increase in the present value of the plan's future
Cash and balances with central banks in-
creased to US$962.2 million from US$902.6
million; this mainly reflected non-interest
bearing deposits at central banks moving
to US$815.4 million from US$766.1 million.
Meanwhile, sums due from banks rose to
US$1.04 billion from US$789.2 million.
Total liabilities advanced by 3 per cent to
US$9.59 billion from US$9.31 billion.
Customers' deposits grew by 5.3 per cent to
US$9.16 billion from US$8.7 billion. Deposits
from business and sovereign sources expanded
by 20.2 per cent to US$5.8 billion from US$4.8
billion. In contrast, funds from individuals
contracted by 14.1 per cent to US$3.26 billion
from US$3.8 billion.
Debt securities in issue fell to US$198.3 mil-
lion from US$208.9 million. All these instru-
ments have contractual maturity dates ranging
from December 2017 through to October 2018.
These sums are payable by its Jamaican and
Trinidadian subsidiaries; in the case of the for-
mer, it is US$23.3 million (12 per cent of the
total) while, in the latter's case, it is US$173.7
million or 88 per cent of the total. A further
US$1.3 million is earmarked for outstanding
Other liabilities declined to US$145.1 mil-
lion from US$159.1 million. Here, the largest
movement was recorded under restructuring
costs, which contracted to US$3.8 million from
Retirement benefits obligations fell to
US$22.9 million from US$37.5 million. This
reduction mostly reflected an actuarial gain
(US$16.5 million) on the post-retirement
Total equity declined to US$1.375 billion from
US$1.380 billion. Excluding non-controlling
interests of US$28.1 million, shareholder's eq-
uity closed at US$1.347 billion from US$1.354
Retained earnings fell to US$397.2 million
from US$434.9 million. The net income for the
year of US$140 million boosted the brought
However, a transfer of US$17.5 million to
reserves along with dividends of US$160.3
million reduced the closing balance. This
large dividend payment included a one-off
US$100 million special disbursement (equiv-
alent to US$0.063 per share) to acknowledge
the bank's return to sustainable profitability.
Reserves improved from negative US$273.5
million to negative US$243 million. This change
reflected the credit from retained earnings of
US$17.5 million along with other comprehen-
sive income of US$12.9 million.
In the latter's case, this comprised the net
of gains on the re-measurement of retirement
benefits (US$21.1 million) and gains on avail-
able-for-sale investment securities (US$5.6
million), but then reduced by exchange losses
on translating foreign (primarily Jamaican and
T&T) operations (US$13.3 million) and US$0.5
million, which was attributable to non-con-
Having 1,570,094,570 shares outstand-
ing, each share had a book value of US$0.858
(TT$5.75). This was marginally lower than the
US$0.863 (TT$5.78) recorded as at year-end
Revenues and profit
Net interest income improved by 2 per cent
to US$369.9 million from US$362.7 million.
Interest and similar income fell by US$4.2
million to US$431.6 million from US$435.8
million. Interest on loans and advances to
customers declined to US$361.1 million from
In addition, interest on investment securities
closed at US$67 million from US$69.1 million.
Helping to mitigate this decline, interest on
cash and similar balances increased to US$3.4
million from US$2.2 million.
Interest and similar expense contracted to
US$61.7 million from US$73.1 million. The
largest reduction was shown under interest
on customers' deposits, which fell to US$42.3
million from US$53 million. Other related ex-
penses also declined to US$11.8 million from
US$15.3 million. However, interest on debt in-
struments rose to US$7.6 million from US$4.8
Other operating income advanced by 2.7
per cent to US$163.9 million from US$159.7
million. The two largest components, net
fee and commissions and foreign exchange
commissions, exhibited contrasting move-
ments; the former slipped to US$107 million
from US$108.7 million, while the latter rose to
US$44 million from US$41.2 million.
Smaller but useful improvements were noted
under net hedging gains (2016: US$4.2 million;
2015: US$1.0 million) and net foreign exchange
revaluation gains (2016: US$6.3 million; 2015:
These changes resulted in total net income
closing at US$533.8 million; this was 2.2 per
cent greater than the US$522.4 million record-
ed for 2015.
Total expenses declined to US$374.7 million
from US$411.6 million.
The operating expenses component fell
to US$357.4 million from US$370.1 million.
Driving this decline was the contraction in
staff costs, which closed at US$177.9 million
from US$193 million. The staff complement
fell to 2,991 from 3,055 as at year-end 2015 and
compares with 3,439 back in 2012.
Although more assets are in place, depre-
ciation charges fell to US$17.9 million from
US$20.2 million. This is explained by the block
of assets (US$32.95 million) against which de-
preciation has not yet been applied, largely
because the projects are not fully operational.
Both other operating expenses and property
and equipment expenses exhibited increas-
es; the former advanced to US$118.2 million
from US$114.3 million while the latter rose to
US$43.4 million from US$44.6 million.
Loan loss impairment contracted to US$17.3
million from US$41.5 million.
The net effect of these movements saw pre-
tax income register at US$159 million from
The effective tax rate declined to 9.9 per
cent from 11.6 per cent; among other varia-
bles, there was a larger amount of income that
was not subject to tax (US$93.3 million versus
After allocating US$15.7 million to taxes and
US$3.3 million to non-controlling interests, the
profit attributable to shareholders registered at
US$140 million; this was 47.8 per cent greater
than the US$94.7 million recorded for 2015.
These results translated to EPS of 8.9
US cents (TT$0.596) versus 6.0 US cents
(TT$0.40) for 2015.
At the RBB segment, gains were recorded
under revenues; despite lower loan loss pro-
visions, this division still incurred a small
loss. In fiscal 2016, international wealth was
transferred from wealth management to this
Revenues were concentrated in Barbados and
Bahamas (35 per cent each), while Jamaica (18
per cent), Caymans (11 per cent) and Trinidad
(1 per cent) made up the balance.
Under the wholesale banking (WB) units,
net interest income and total revenues de-
clined. In addition, the loan loss impairment
cost contracted by 86 per cent. These changes
helped boost pre-tax profit by 51 per cent. Here,
revenues were generated by Bahamas (35 per
cent), Barbados (27 per cent), Jamaica (24 per
cent), Caymans (9 per cent) and Trinidad (5
Although wealth management (WM) had
higher net interest income, total revenues fell
short by about 7.6 per cent. Even so, pre-tax
income grew by 11.2 per cent.
Not surprisingly, Caymans dominated the
revenue stream with 57 per cent, while Baha-
mas accounted for 28 per cent; Barbados (13
per cent) and Jamaica (2 per cent) made up
The administration segment includes treas-
ury, finance, HR, risk, technology and oper-
Following the bank's exit from Belize, it has
now entered the Aruban retail market.
Share price and dividends
On the TTSE, FCI's share price closed at
TT$5.00 on October 31, 2015. It was not until
March 1, 2016 that it crossed TT$6.00 while
investors waited until June 28, 2016 to bid the
price up to TT$7.00.
Eventually, it closed on October 31, 2016 at
TT$8.10. That represented an annual price
appreciation of 62 per cent.
On February 16, 2017, the price closed at
TT$9.00 and last Friday it settled at TT$9.16.
Excluding the special dividend of 6.3 US
cents paid in January 2016, the regular divi-
dend for fiscal 2015 was 3.5 US cents. For fiscal
2016, the dividend increased to 4.5 US cents
(TT 30 cents).
At the recent price of TT$9.16, the dividend
yield was 3.3 per cent. That price also repre-
sents a P/E multiple of 15.4 and a price to book
value of 1.59.
It is attractive for local investors to buy a TT
dollar denominated asset that generates a US
dollar income stream.
In the next article, we will review Scotia In-
vestments Jamaica Ltd 2016 results.
Links Archive March 8th 2017 March 10th 2017 Navigation Previous Page Next Page