Feb 2007 Financial News

Scotiabank Releases First Quarter Results

Feb 26, 2007

Results for the Three Months Ended January 31, 2007.

Scotiabank (Trinidad & Tobago) Limited (SBTT) continued to report commendable results for its First Quarter ended January 31, 2007. The Bank’s Earnings Per Share (EPS) increased 26.02 per cent to 52.3 cents compared to Q1-FY06’s EPS of 41.50 cents. According to the Managing Director, the performance reflects a commitment to shareholders to a sound execution of SBTT’s strategic initiatives. These initiatives comprise excellent sales and service, product diversification and an efficient operating platform leveraging technology.

SBTT’s performance was driven by its top line as Net Interest Income rose 18.80 per cent to $143.988 million. Other Income rose 25.63 per cent to $53.646 million resulting in Net Interest & Other Income increasing 20.58 per cent to $197.634 million.

The growth in top line was complimented by expenditure control as the Group saw a relatively smaller increase in Non Interest Expenses of 13.53 per cent to $77.465 million for Q1-FY07. Of this total, Salaries and Staff Benefits comprised 49.32 per cent remaining the major component. Premises & Technology accounted for 21.35 per cent while Other Expenses made up 22.36 per cent. The Group also saw a 134.09 per cent drop in Loan Loss Expenses from $2.370 million (Q1-FY06) to -$0.808 million (Q1-FY07).

The Bank’s strong performance drove Income Before Taxation up 25.61 per cent to $120.169 million. The Effective Tax Rate rose from 23.46 per cent (Q1-FY06) to 23.26 per cent (Q1-FY07) resulting ultimately in an increase in Income After Tax of 25.95 per cent to $92.219 million.

On the Balance Sheet, the Bank’s Assets grew 10.77 per cent to $10.182 billion from its recent year ended October 31, 2006 with Net Loans to Customers contributing 76.44 per cent. On the liabilities side, Total Liabilities (excluding Deferred Tax Liability) rose 12.01 per cent to $8.753 billion over the same period. Of this total, Deposits comprised 82.57 per cent.

The Directors have resolved to pay a first interim dividend of 21 cents per ordinary share on March 27, 2007 to shareholders on record as at March 06, 2007.

As a result of this performance, we are revising our forecasted EPS from $2.05 to $2.15. At the current price of $32.08 and this forecasted EPS, SBTT is trading at a price/earnings ratio of 14.92 times. Given that this share usually trades within the range of 13 to 15 times earnings, coupled with the fact that its target price stands at $32.25, we currently recommend a HOLD.

Sreshtha Tewari
WISE Research Team