May 2006 Financial News

RBTT Financial Holdings Limited Releases Year End Results

May 15, 2006

The results of RBTT Financial Holdings Limited (RBTT) for the financial year ended March 31, 2006 as presented appeared flat, with a marginal growth in EPS (diluted) of 0.75%, from $2.66 to $2.68. The Chairman’s Report sought to remind investors though that the results of 2005 were impacted significantly by non-recurring transactions. Among the non recurring items was a gain of $229 million realized on the sale of part of the Group’s shareholding in Guardian Holdings Limited.” This one-off gain had been included in the Consolidated Income Statement for the financial year March 31, 2005, arising from a put-through transaction, which occurred on April 1, 2005. The Chairman’s Report noted that without the one-off transactions the pre-tax profits of the Group would have attained a growth of 10.9%.

The Directors have declared a final dividend payment of $0.65 cents per share, to be paid on June 9, 2006. This payment brings the total dividend payment for the year to $1.20, compared to $1.18 paid for 2005.

RBTT experienced an 11.2% increase in Net Interest Income, which was the main driver behind the Group’s increase in Total Net Income from $2.78 billion to $3 billion. The Provision for Credit Losses net of Recoveries was the major increase in Expenses, jumping $95.6 million, while the Non-Interest Expenses rose $85.5 million. Another component of the flat performance was a falling away of The Share of Profits from Associates and Joint Ventures, which dropped from $67.6 million to $18 million (-73%). Profits Attributable to the Shareholders of the Company increased 0.85% from $915 million to $916 million.

At the current price of $30.01, the shares of RBTT are trading at a P/E multiple of 11.2 times, which is a significant discount to the other local banks. Based on an estimated growth in earnings of 15%, we forecast the earnings for the 2007 financial year end to be in the range of $3.05 to $3.10. We believe that a more realistic multiple for RBTT lies in the 12.5 to 15 times range, which leaves a healthy margin for growth from the current share price. As a result we recommend a BUY for this share.

Jason Gokool
WISE Research Team