Apr 2007 Financial News

RBL Releases Half Year Results

Apr 30, 2007

Results for the Half Year Ended March 31, 2007

For the Half Year Ended March 31, 2007, Republic Bank Limited (RBL) reported an outstanding diluted Earnings Per Share (EPS) of $5.09, which was up on the comparable Half Year for 2006 by 119.40 per cent or $2.32. However, this significant growth in EPS was mainly due to a Net Gain on the sale of the Bank’s shareholding in First Caribbean International Bank (FCIB). The realized profit on this sale was $370.12 million. According to the Chairman, if adjustments are made for the effect of this gain on investment, the Group’s earnings from core operations increased by 21.7 per cent.

Net Interest Income for the Half Year under review stood at $807.96 million and was up on the corresponding period for FY06 by 15.70 per cent or $109.61 million. For Q207, this figure stood at $413.69 million compared to $358.81 million for Q206, a similar increase of 15.30 per cent. HY07 on HY06, Other Income grew by 20.92 per cent or $85.16 million to end the period at $492.18 million; while Q207 on Q206 this figure increased by a significant 30.99 per cent or $62.40 million to end the second quarter at $263.75 million. As a result, Total Income for the Half Year amounted to $1.30 billion up by $194.77 million or 17.62 per cent on the comparable Half Year for FY06.

For the Half Year Ended March 31, 2007, the Bank had a Loan Impairment Expense of $54.97 million which was an increase of 445.10 per cent or $44.88 million on the Half Year Ended March 31, 2006. The majority of this impairment expense was realized in the second quarter of FY07 which amounted to $41.89 million. Operating Expenses however saw a significantly smaller increase of 8.28 per cent and ended the Half Year period at $636.04 million. This figure was spread relatively evenly over the two quarters for FY07. After these expenses were deducted from Total Income and the previously mentioned gain on FCIB shares, the Bank’s Operating Profit ended the Half Year at $979.25 million. This figure was up by a considerable 90.98 per cent on the corresponding Half Year period for FY06.

Profit Before Taxation, which included Share of Profits of Associated Companies of $15.37 million, was up by 91.17 per cent or $476.72 million to close the Half Year at $999.62 million. The Effective Tax Rate for the period under review was 13.35 per cent compared to a Tax Rate of 20.38 per cent for HY06. Thus, Net Profit After Taxation was $861.14 million compared to $416.33 million for HY06- an increase of 106.84 per cent or $444.81 million.

The Board of Directors has approved a Half Year Dividend of 94 cents per share (77 cents in FY06) payable to shareholders on May 29, 2007.

RBL’s shares are currently trading at a price of $80.00 on the local market. In light of the current results, we are updating our forecasted EPS for FY07 to $7.60. While this forecasted EPS would result in an attractive price to earnings multiple of 10.53 times, the earnings from core operations should be used for analysis. Thus, adjusting for the gain the forecasted EPS from core earnings would be approximately $5.30 which translates into a multiple of 15.09 times. As such, we continue to recommend a HOLD on this share.

Gia Singh
WISE Equity Research Team