Aug 2008 Financial News

RBL Releases Nine Months Results

Aug 08, 2008

Republic Bank Limited
Results for the Nine Months Ended June 30, 2008

Earnings Per Share
Republic Bank Limited (RBL) has had another successful quarter for FY08. The Bank reported a diluted Earnings Per Share (EPS) of $1.92 for the Third Quarter which brought the Nine Month EPS to $5.84 for FY08. NM08 on NM07, this represented a decline of 10.6 per cent or $0.69 while Q308 on Q307, the EPS grew by an outstanding 31.5 per cent or $0.46. It should be noted that the Bank’s Profit Attributable to Shareholders for NM08 of $937.3 million, included a net gain of $82 million from the allocation of shares in Visa Inc. while the Profit Attributable to Shareholders for NM07 of $1.0 billion included a $370 million gain from the disposal of shares in FirstCaribbean International Bank. Excluding the two exceptional items, core earnings for NM08 and NM07 stood at $855.3 million and $677.2 million respectively. As such, RBL’s core EPS increased 26.3 per cent from approximately $4.22 (NM07) to $5.33 (NM08).

Financial Highlights (NM08 on NM07)
• Net Interest Income, up 15.6 per cent or $190.2 million to $1.4 billion
• Other Income, up 14.3 per cent or $100.4 million to $801.6 million
• Operating Expenses, up 6.6 per cent or $63.7 million to $1.0 billion
• Operating Profit, up 23.7 per cent or $226.9 million to $1.2 billion
• Profit Before Taxation, down 2.4 per cent or $31.2 million to $1.3 billion
• Loss on discontinued operations was $2.6 million for NM08 compared to $19.4 million for NM07
• Profit After Taxation, down 9.1 per cent or $102.0 million from $1.1 billion (NM07) to $1.0 billion (NM08)

Financial Highlights (Q308 on Q307)
• Net Interest Income, up 13.4 per cent or $56.4 million to $479.0 million
• Other Income, up 29.0 per cent or $64.1 million to $285.1 million
• Operating Expenses, up 7.3 per cent or $23.5 million to $346.6 million
• Operating Profit, up 30.3 per cent or $97.0 million to $417.5 million
• Profit Before Taxation, up 30.3 per cent or $97.0 million to $417.5 million
• Profit After Taxation, up a significant 28.7 per cent or $73.7 million from $256.9 million (Q307) to $330.5 million (Q308)

The total assets of the Bank ended the Nine Month period at $41.6 billion, up 12.3 per cent or $4.6 billion on NM07. Return on Equity and Return on Assets were 26.5 per cent (NM07: 33.4 per cent) and 3.4 per cent (NM07: 4.1 per cent) respectively.

Recommendation
RBL shares are currently trading at a price of $102.14. We have revised our forecasted EPS for FY08 upwards to $7.80. At the current price and this revised forecast, RBL is trading at a price to earnings multiple of 13.1 times. Additionally at the revised forecasted EPS and a multiple of 15 times, this share has an expected return of approximately 15 per cent on the current price or a target price of $117.00. As such, we recommend a BUY on this share.


Nancy Chen
WISE Equity Research Team