Home' Trinidad and Tobago Guardian : July 4th 2013 Contents CIBC/First Caribbean International
Bank Ltd (FCIB)
FCIB half-year results were
broadly in line with market con-
ditions and investor expecta-
tions. Total assets grew from
the October 2012 year-end level
of US$11.5 billion to US$11.7 bil-
lion as at the April 2013. Three areas exhibited
significantly higher balances when compared
to the 2012 year-end figures. These were cash
and similar balances, investment securities and
Cash, balances with Central Bank and due
from banks increased from US$2.38 billion as
at October 2012 to US$2.71 billion as at the
end of April 2013.
To some extent, this reflects lower demands
for loans. This surplus liquidity would have
allowed it to increase its holding of investment
assets; this balance grew to US$1.82 billion
from the US$1.70 billion it held as at year-end
In keeping with customers continuing trust
and confidence in banking institutions, deposits
and other borrowed funds rose from the year-
end balance of US$9.64 billion to US$9.84
billion as at the April 2013 half-year.
Very predictably, as demand for loans slowed
and customers willingness to repay and even
accelerate their payments improved, the bank s
loan assets declined; these fell to US$6.47
billion as at the end of April 2013 from US$6.83
billion last October.
Income and profitability changes
These changes were largely reflected in the
composition of FCIB s income statement. Inter-
est income declined to US$233.3 million from
US$250 million in the comparative period in
2012. Similarly, interest expenses also declined
from US$52.3 million for the six months ended
April 2012 to US$47.4 million for the current
six-month period. In total, net interest income
for the six months ended April 2013 was
US$185.9 million or six per cent lower than
the US$197.8 million reported for the com-
parative period in 2012.
Operating income exhibited growth of 8.4
per cent to reach U$77.4 million from the 2012
result of US$71.4 million. On that basis, total
income closed 2013 at US$263.3 million. This
was US$5.9 million (2.2 per cent) lower than
the US$269.2 million recorded for the first six
months of 2012.
Higher business taxes and non-credit losses
pushed up operating expenses by US$9.9 mil-
lion. Thus, the current period s figure closed
at US$178.1 million (2012: US$168.2 million.)
On the positive side, loan loss impairment
declined to US$48.6 million from the prior
period s US$71 million. This reduction was
attributed to lower specific provisions.
Also, contributing to lower expenses was
the elimination of the cost of amortising intan-
gible assets; in the prior period this consumed
US$0.7 million. Consequently, total expenses
fell to US$226.8 million from US$239.9 million
for the first six months of 2012.
The net effect of these changes saw pre-tax
income close at US$36.6 million. This repre-
sented an improvement of 24.8 per cent over
the U$28.3 million reported for the half-year
to April 2012.
In the 2012 period, there was a useful tax
credit of US$125k, which pushed up after tax
income to US$29.5 million. In the current period,
there was a tax charge of almost US$2.6 million,
which pulled down the after tax result to U$34
million. Thus, on an after-tax basis, the improve-
ment was less dramatic; 15.5 per cent, instead
of the almost 25 per cent on a pre-tax basis.
When we compare the profit attributable to
shareholders, we see a further improvement.
This measure rose from US$28 million in the
2012 period to US$33.6 million in the current
period, or by 19.9 per cent.
When the parent company acquires all of
the shares of the Jamaican subsidiary and it
becomes fully delisted, there will not be any
minority interest. On a per share basis, this
reflects current EPS of 2.1 US cents versus 1.8
US cents for the 2012 period. The bank main-
tained its interim dividend payment of 1.5 US
cents, which was paid at the end of June 2013.
FCIB operates under three distinct segments,
retail banking (RB), corporate lending and
investment banking (CLIB) and wealth man-
agement (WM); the administration (Admin)
segment includes earnings on economic capital
and capital changes for treasury and the offset
from the other segments.
For the six months ending in April 2013,
retail banking had slightly lower external rev-
enues of US$88.3 million (2012: US$90.8 mil-
lion). Pre-tax segment results moved from last
year s profit of US$2.8 million to a current
period loss of US$13.8 million.
Also experiencing declining revenues was
the CLIB segment. In this case, external rev-
enues moved from the 2012 figure of US$123.4
million to US$106.2 million. Despite this decline,
segment losses improved from US$18.4 million
in the 2012 period to a more modest loss of
US$0.9 million in the current period.
Wealth management continues to deliver
strong and consistent results. External revenues
were only modestly higher. (2013: US$24.9
million; 2012: US$24.1 million)
Even so, segment profit rose from the 2012
result of US$17.7 million to US$22.5 million,
or by 27.6 per cent.
At US$28.8 million, the administration seg-
ment s result was 5.5 per cent more than the
US$27.3 million recorded for the 2012 half-
Scotiabank T&T Ltd (SBTT)
For the first six months of the current year,
Scotiabank s total assets increased by almost
four per cent to $18.4 billion from $17.7 billion
as at October 2012. Both deposit and loan bal-
ances recorded increases. In addition, balances
in treasury bills, investment securities and pol-
icyholders funds were higher than those as at
year-end October 2012.
Treasury bills balances increased from $1.82
billion as at October 2012 to $2.07 billion as
at April 2013. Similarly, investment securities
rose to $1.3 billion from $1.1 billion as at last
Another line item that showed an increase
was customers deposits; this rose to $13.46
billion from the year-end balance of $12.93
billion. The common influencing factors for
these three items were probably the continuing
high levels of liquidity in the local economy
accompanied by low (though improving) levels
of economic activity.
Probably helped by increasing levels of mort-
gage applications, the bank s loan balances
improved slightly to $10.12 billion from $9.96
billion at last October. Since homeowners tend
to need more insurance than other borrowers,
this may be related to the rise in policyholders
funds; this item improved to $683.5 million
from $631 million as at its October year-end.
Income and profitability changes
Not surprisingly, net interest income for the
six months to April 2013 declined to $443.1
million from the $462 million recorded for the
comparative period in 2012. Most likely, both
interest income and interest expense would
Where the greatest improvement was shown
was in other income. This item includes fees,
commissions, and net premium income and
foreign exchange earnings. Given that the insur-
ance services and retail banking segments
showed very healthy increases in fee and com-
mission income, it is not surprising that this
item showed a robust 30.4 per cent increase
to reach $224.5 million from last period s $172.1
These changes allowed SBTT to record net
interest and other income of $667.6 million;
this was a 5.3 per cent improvement over the
$634.1 million recorded for the six months to
Other expenses include employee compen-
sation, premises and technology, communi-
cations and marketing; these costs increased
from $279.8 million in 2012 to $306.1 million
in the current half-year, or by 9.4 per cent.
Mitigating this somewhat was the decline in
loan loss expense, which fell to $7.96 million
from $10.54 million in the earlier period.
These changes allowed Scotiabank to report
a pre-tax profit of $353.6 million; this is 2.9
per cent more than the $343.7 million recorded
for the 2012 half-year. This gain was eroded
due to a marginally higher tax allocation (2013:
23.25 per cent; 2012: 21.8 per cent of profit).
Thus, the after-tax result of $271.3 million was
less than one per cent greater than the $268.7
million recorded for the comparable period in
The bank operates along three major seg-
ments, that is, corporate, commercial and mer-
chant banking (CCM), retail banking (RB) and
insurance services (IS). Another segment,
"other", includes the functions of a centralised
treasury unit and other centralised services.
One outstanding feature of the half-year
results to April 2013 is that the insurance services
segment is the only division to record an increase
in its contribution to pre-tax profits. For 2013,
this profit was $57.9 million, representing an
increase of 24.3 per cent over the $46.6 million
recorded for the 2012 half-year.
Currently, this figure represents 16.4 per cent
of total pre-tax income. Perhaps, in three to
five years time, and if this growth rate persists
(or accelerates) this contribution might grow
to as much as fifty per cent?
Fees and commissions for the insurance seg-
ment grew from $30.5 million in the April 2012
half-year to $38.8 million in the current half-
year, or by 27.5 per cent. Less robustly, net
interest income rose by 12.8 per cent to $30.7
million from $27.2 million in the last period.
Total revenues for the retail banking segment
rose by 2.4 per cent to $391.9 million from last
period s $382.7 million. Despite this increase,
pre-tax profits declined to $151.6 million from
last period s $153.5 million.
Meanwhile, revenues at CCM banking con-
tracted from the 2012 figure of $162.9 million
to $148.8 million in the current period, or by
8.6 per cent. However, the drop in segment
profit was 10.2 per cent; this figure moved from
the 2012 result of $144.2 million to the current
profit of $129.4 million.
The other (that is, treasury and centralised
services) division swung from a loss of $4.675
million in 2012 to a profit of $3.53 million in
the half-year to April 2013.
JULY 2013 • WEEK ONE www.guardian.co.tt BUSINESS GUARDIAN
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