Jun 2008 Financial News

RBTT Jamaica makes $820m - Trinidad parent reports flat results as tax charges bite

Jun 06, 2008

Jamaica's RBTT Bank made TT$70.3 million (J$823m) in after tax profit at year end March 2008, a less than four per cent improvement in a year of strong growth for commercial banking, but a slightly better showing than its Trinidad parent RBTT Financial Holdings whose bottomline was flat, returning TT$2.71 per share.

Still, RBTT Jamaica's performance was anaemic compared to its rivals, whose profit growth last year ranged between 12 and 31 per cent, at least for the three listed banks whose accounts are publicly available.

RBTT Financial made net profit of TT$938.7 million, a half point up on the TT$934 million reported in March 2007, with all geographic segments except Trinidad showing improvements.

The loss of traction was not, as chairman Peter July signalled, due to operational deficiencies.

Bigger pre-tax profits

Indeed, the group had higher operating profit and bigger pre-tax profits which rose 11 per cent year on year to US$1.3 billion across all geographic segments, but flattened at the bottomline because of heavy corporate taxes.

Said July: "The group's tax charge increased significantly by TT$124 million or 50 per cent over the previous year due to several factors which include higher taxable income generated by retail banking entities, increased provisions for tax assessments and changes to the tax legislation in one jurisdiction."

Lower net profits

July did not specify, but Trinidad's tax bill climbed from TT$158 million to TT$225 million - the group paid a combined TT$371 million in taxes - resulting in lower net profits for that market.

But the twin-island continued to dominate the group, contributing 62 per cent of profit, compared to 65 per cent at year end March 2007.

Jamaica, which makes a 7.5 per cent contribution to the bottomline - a marginally improved outturn on last year's 7.2 per cent - remains the smallest of four geographic segments, but as a single entity, stands behind Trinidad in size.

The group's eastern Caribbean markets and Dutch territories are counted as two segments, each contributing $138 million and $147 million, respectively, to bottomline profit in the financial year just ended.

RBTT Jamaica is the number three bank in this market, eclipsed by Scotiabank Jamaica and National Commercial Bank, but ahead of FirstCaribbean Jamaica in all key markets - loans, total assets, deposits and capital base.

New Bank of Jamaica industry figures released this week puts RBTT Jamaica's capital base at J$8.6 billion in a sector capitalised at $59 billion.

FCIBJ, however, runs close to RBTT Jamaica in profit performance, reporting net i ncome of $771 million in 2007, reflecting bottomline growth of 31 per cent in that year.

But new RBTT Jamaica managing director Minna Israel - in the job since January - is already promising to widen the distance between the two, saying the springboard would be RBTT's rebranding to Royal Bank.

July in a statement accompanying the group accounts, said RBTT's retail and commercial banking business was a top performer in the company, citing a key marker - a 10 per cent contribution to net interest income which grew to TT$2.1 billion last year. Net revenues also rose to TT$3.3 billion.

'Sluggish market conditions'

The financial firm's investment arm and asset management business, however, slipped by five and three per cent, respectively, due July said to "sluggish market conditions."

Overall, RBTT ended the year with improved balance sheet assets and a stronger capital base of TT$5 billion, up TT$600 million in the year. Total assets rose by $5 billion to $53 billion, nearly half of which is the form of loans and advances which grew 12 per cent to TT$25 billion.

RBTT's banking operation will on June 16 be merged with the regional operations of Royal Bank of Canada, following regulatory approval of the US$2.2 billion cash and shares deal that will amalgamate RBTT and RBC Holdings (Trinidad & Tobago) Limited.

(TT$1=J$11.71)


Source:
business@gleanerjm.com
Jamaica Gleaner
Friday June 6, 2008

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