May 2009 Financial News

Republic Bank is strong and stable

May 25, 2009

Republic Bank’s rating of BBB- by international rating agency, Standard & Poor’s is investment grade, and demonstrates that the Bank is strong and stable. This observation was made by the bank’s managing director, David Dulal-Whiteway, in commenting on the recent downgrade of the rating from BBB to BBB-. In elaborating on the reasons for the shift in rating, Dulal-Whiteway said that it was two-fold—the expected less than dynamic performance of the T&T economy, and the increase in the non-performing assets of Republic Bank. The bank’s non-performing loans to total loans ratio, crossed 4 per cent as at March 2009, though its asset quality remains stable.

According to Dulal-Whiteway, the BBB- rating is one that Republic Bank held for many years, when its non-performing ratios were above 4 per cent. He said, “Over the years we have worked very hard on bringing this ratio down, and received the upgrade to BBB in July, 2007. As is noted in our recently published half-year un-audited financial statements, the increase in the non-performing category was due primarily to the uncertainty surrounding the Clico Group and Republic Bank’s credit exposure to that Group”.

Dulal-Whiteway said, “As the financials indicated, our total exposure to the CL Financial group is $991.9 million; we have made a provision of $134.3 million for that exposure. Our loan loss for the first half year of the 2009 fiscal went up from $20.8 million during the last fiscal period to $201.7 million. Dulal-Whiteway also reiterated that there was no financial spill-over effect from the Clico situation, since Republic Bank is independently operated.While these provisioning adjustments have directly impacted the downgrade, the bank remains stable as noted by Standard & Poor’s, and has been removed from credit watch.

Watson not worried
Meanwhile, Prof Patrick Watson, the head of the Sir Arthur Lewis Institute of Social and Economic Research, says he is not worried and the country as a whole should not worry about the downgrade. Clarifying and expanding on comments in a Guardian article yesterday, Watson said that there was nothing to “worry about our commercial banks, including and especially Republic Bank, since they practise sound banking principles and are in good shape.” Watson said he would bet that the profits of the commercial banks for this year would be close to what they were in previous years.

Source: Trinidad Guardian
http://guardian.co.tt/business/business/2009/05/23/republic-bank-strong-and-stable
Date:25-05-09