Home' Trinidad and Tobago Guardian : May 4th 2017 Contents MAY 4 • 2017 guardian.co.tt BUSINESS GUARDIAN
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Acquisition helps AMBL's 2016 results
In October 2016, ANSA Merchant
Bank Ltd (AMBL) purchased Bar-
bados-based Consolidated Finance
Company Ltd (CFC) from its par-
ent, ANSA McAL Ltd, which owns
82.48 per cent of AMBL's outstanding
Let us now review AMBL's results to December
Changes in financial position
The inclusion of CFC added $804.4 million
to AMBL's assets, primarily under loans and
leases of $578.2 million. Total assets advanced
from $6.74 billion to $7.41 billion or by 10 per
Investment securities increased marginal-
ly to $3.28 billion from $3.25 billion. Invest-
ments designated at fair value through income
statement declined to $965 million from $1.27
Here, the largest contraction was shown
under equities, which closed at $691.1 mil-
lion from $884.5 million. Government bonds
ended at $30.1 million from $116.7 million.
Investments at amortised cost rose to $2.32
billion from $1.98 billion with all categories
Leased assets and other instalment loans ad-
vanced by 42.3 per cent to $1.43 billion from
$1.0 billion. At the gross level, before deducting
future finance charges, fees and provisions,
hire purchase arrangements rose from $921.8
million to $1.46 billion. In contrast, finance
leases declined to $259.2 million from $286.2
The present value of minimum lease pay-
ments is almost equally divided among per-
sonal (51.5 per cent) and commercial (48.5 per
Loans and advances grew by almost $10
million or 11.5 per cent to $876.3 million from
$866.3 million. Not surprisingly, advances to
the construction and real estate sector declined
to $421.8 million from $517.2 million.
Also, loans to the financial sector collapsed
to zero from $30.2 million. Notably, disburse-
ments to the retail, distribution and manu-
facturing sector rose to $185.5 million from
$155.7 million. All other categories increased
by smaller amounts.
Property and equipment climbed to $182.8
million from a modest $28.6 million. Of this
net increase, $151.8 million related to the CFC
(The book value of the lands and buildings
component closed at $13.8 million; given that
this included the iconic TATIL building, this
number seems low.)
Intangible assets rose from $133.8 million
to $136.4 million. The increase of $2.6 million
comprised the excess of the purchase price for
CFC ($177.8 million) versus the $175.2 million
net assets acquired.
Employee benefit assets closed at $129.1
million from $118.4 million. This reflects the
excess of the fair value of the pension plan's
assets ($228.5 million) over the present value
of its future obligations ($99.4 million). This
improvement was helped by the addition of
$10.7 million in plan assets from the business
combination with CFC.
Cash and short-term funds advanced from
$720 million to $766.1 million. Included in this
figure was $108.1 million in Central Bank Re-
serves (2015: $67.7 million). Of the remainder,
$334.8 million was denominated in US dollars.
Total liabilities expanded to $5.21 billion from
$4.7 billion or by 10.8 per cent.
Customers' deposits and other funding in-
struments rose by 15.4 per cent to $2.31 billion
from $1.99 billion. This figure includes $571
million from the CFC acquisition, which sug-
gests that locally sourced deposits declined.
Individually sourced deposits climbed to
$1.08 billion from $616.6 million while those
obtained from pension funds and credit un-
ions fell to $462 million from $521.1 million.
Deposits from private companies, estates and
financial institutions also dropped to $764.3
million from $859.2 million.
Debt securities outstanding increased to
$1.0 billion from $911.4 million. This mainly
represented the issue of $100.8 million in new
promissory notes in three equal tranches at
rates ranging from 3.05 per cent to 3.43 per
cent. These notes mature on October 3, 2017,
2018 and 2019 respectively and were used to
partly finance the CFC purchase.
Investment contract liabilities expanded to
$224.9 million from $210.2 million. Premiums
declined to $19.6 million from $24.8 million
while interest credited increased to $9.7 million
from $8.7 million. Benefits and other payment
rose to $14.6 million from $14.2 million.
Insurance contract liabilities improved
marginally to $1.36 billion from $1.33 billion.
General insurance contracts declined to $352.7
million from $358.6 million while life insurance
contracts closed at $1.01 billion from $966.5
Accrued interest and other payables ad-
vanced to $139.7 million from $103.3 million.
Sums due to reinsurers fell to $14.7 million
from $19.9 million.
Among the larger increases were amounts
due to statutory authorities, which soared to
$15.7 million from $4.9 million. Also, inter-
est payable climbed to $26 million from $13.9
million while client funds held for investment
more than doubled to $35.7 million from $15.2
Total equity improved to $2.20 billion from
$2.04 billion. Excluding non-controlling inter-
ests of $520,000., shareholders' equity closed
at $2.2 billion from $2.04 billion.
Retained earnings ended at $1.29 billion from
$1.15 billion. The opening balance benefitted
from the current year's profit of $251.7 million
while dividends to owners consumed $89.9
Transfers to various reserve accounts, to-
talling $16 million, along with a small com-
prehensive loss of $1.6 million lowered the
The foreign currency reserve benefitted
from comprehensive income of $1.8 million
The stated capital was unchanged at $667.3
million. Also, the weighted average number of
shares for both years was stable at 85,605,263;
consequently, the book value of each share im-
proved to $25.72 from $23.83 as at December
Income and profit
Total income advanced by 12.8 per cent to
$813.8 million from $721.1 million. The larg-
est component, net insurance revenue, rose to
$314.1 million from $293.8 million.
Finance charges, loan fees and other interest
income increased by 12.8 per cent to $197.3 mil-
lion from $174.9 million. Here, finance charges
earned contributed $130.4 million (2015: $123.5
million) and interest on loans and advances
added $28.2 million (2015: $21.7 million) and
other income provided $38.8 million (2015:
Investment income, at $149 million, was
marginally better than 2015's $146.4 million.
Interest income from amortised investments
increased to $124.9 million from $109.3 million.
However, interest income from investments
via income statement fell to $16.1 million from
Although lower than 2015's $22.7 million,
realised and unrealized losses on investments
closed at $19 million.
Other income advanced to $153.3 million
from $106.0 million. Helped by the depreci-
ation of the local currency, foreign exchange
gains swelled to $80.9 million from $34.1
million while property rental jumped to $29.6
million from $18.6 million. The only major de-
cline was noted under administrative fees and
commissions, which fell to $29.3 million from
Insurance benefits and claims increased to
$201.4 million from $182.7 million. The life
insurance portion rose to $121.3 million from
$103.1 million while the general insurance
segment settled at $80.2 million from $66.3
Interest expenses climbed to $84.6 million
from $68 million. Helped by larger CFC de-
posits, interest on these liabilities grew by 45
per cent to $47.7 million from $32.9 million.
Also, reflecting its higher debt, interest on
loans rose to $36.9 million from $35.1 million.
Write-backs on investment impairments
declined to $5.6 million from $38 million. In
addition, loan loss provisions improved from a
charge of $15.1 million in 2015 to a write-back
These changes resulted in a net operating
income of $533.5 million versus $493.2 million
Selling and administrative expenses reg-
istered a 7.9 per cent increase, moving from
$196 million to $211.5 million. The personnel
costs and depreciation components recorded
the largest increases; the former rose to $70.5
million from $59.2 million while the latter
soared to $11.5 million from $3.7 million. Both
factors were influenced by the CFC acquisition.
Helped by lower communication costs and
the elimination of other receivables, the general
administrative expenses component declined
to $55 million from $59.4 million.
These movements saw pre-tax profit close
at $322 million from $297.3 million. After al-
lowing for taxes of $70.3 million and minority
interests of $33,000, the profit attributable
to shareholders registered at $251.7 million.
This result reflects an improvement of 1.7 per
cent over 2015's $247.4 million and translated
to EPS of $2.94 compared with $2.89 for 2015.
At the banking services segment, growth
in operating income was helped by the CFC
Taxation, which rose by $19.6 million, pulled
down this division's net results.
The mutual funds segment generated higher
revenues while its expenses fell by $2.2 million.
Revenue growth was helped by improved for-
eign exchange and similar gains, which climbed
to $13.7 million from $2.8 million. These factors
helped it to reverse the previous year's loss.
Life insurance operating income rose by 24
per cent while expenses, which include claims
and benefits, climbed by only 17 per cent. This
helped the net profit improve by 40.6 per cent.
Operating income at the general insurance
division improved by less than 10 per cent
while operating expenses increased marginally.
However, selling and administration expenses
climbed by 23.6 per cent. That factor limited
net profit growth to a modest 6.5 per cent.
Interestingly, the net profit from its inter-
national operations soared from $31.7 million
to $95.6 million. In contrast, profit from both
its domestic services and regional operations
Share price and dividends
AMBL's share price closed at $38.96 on
December 31, 2015 and ended 2016 at $40.10,
reflecting a one- year appreciation of 2.96 per
cent. In 2017, the share experienced a fall to
$38.00 on March 9, but recently closed at
Total dividends increased from $1.05 for 2015
to $1.20 for 2016. The final dividend of $1.00
will be paid on May 26, 2017. Relating the total
2016 dividend of $1.20 to the recent price of
$40.00, the yield is 3.00 per cent. That price
also reflects a P/E multiple of 13.6 and price
to book value of 1.56.
In next week's article, we will review Guardian
Holdings Ltd 2016 results.
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