Dec 2014 Financial News

First Citizens announces ‘very good’ performance

Dec 10, 2014

FIRST Citizens yesterday declared a profit before tax of $773 million and after tax profit of $627 million for the financial year ended September 30, 2014. Announcing the results at a news conference yesterday at the bank’s corporate headquarters at Queen’s Park East, First Citizens Chief Financial Officer, Shiva Manraj, said the bank’s performance was “very good”. He said the before tax profit represented a 3.7 percent growth over the previous year and the after tax profit was a three percent improvement on the prior year.

Explaining the strong results, he said the bank enjoyed growth in total income and had managed its expenses. The bank’s total assets declined from $36 billion last year to $35 billion this financial year while its total liabilities remained at $26 billion, the same as the previous year. Manraj explained that there had been an exceptional item with the proceeds from the IPO amounting to $1 billion, which was paid over to the Government.

He said shareholders’ equity was $6.25 billion, increasing 4.5 percent from the year before, causing earnings per share to rise to $2.50 from $2.42 last year, a 3.3 percent increase. He said the bank’s final dividends for the year will be $1.18 compared to $1.09 in the previous financial year, an increase of 8.3 percent. The final dividends will be paid toward the end of this month, he said. Manraj told journalists that First Citizens recorded an increase in its dividend yield from 2.96 percent last year to 3.2 percent while the norm in the banking sector was 3.4 percent.

He said First Citizens had compared its results to those of Scotiabank and Republic Bank. Profit margin was 37.3 percent compared to the industry average of 37 percent; net interest margin was 78.6 percent compared to last year’s 73.5 percent “a significant increase of five percent over last year.” Return on average equity was 10.3 percent while the industry average was 10.2 percent; return on average assets was 1.8 percent while the industry average was 1.7 percent.

The bank executive said return on average assets was a rating of profitability of total assets. Capital adequacy ratio — a measure used by the Central Bank to guage a bank’s ability to expand loans — stood at 54.7 percent while the industry norm was 35 percent.

“So again, when you look at our ratios, we have very robust ratios when compared to the industry,” Manraj said, “and we have had a very good year compared to previous years.

“The bank continues to perform very well even though we have higher liquidity in the sector and the interest rate environment continues to be low.” In response to a question, Manraj said the capital adequacy ratio at 54 percent was “a very solid ratio. It speaks to the bank’s ability to lend and to finance any future possible acquisition.”

Pressed to expand on his comment about possible future acquisitions, he said the bank had nothing specific in its sights at the moment, “but the bank continues to look at any potential investment opportunities overseas. I mean, we have to look at non-organic growth as well as organic growth.”

He said loan growth has been very low in the banking sector and the bank’s policy for loan loss followed international accounting standards and there had not been any “significant increases” and no significant issues regarding loan loss provisions in the current financial year. In any event, he said the bank’s loan loss provision of 4.5 percent was below the industry average of just over five percent.

Source:
By Verne Burnett
Newsday
Wednesday December 10, 2014

http://www.newsday.co.tt/business/0,204083.html