Jul 2007 Financial News

RBL Releases Nine Months Results

Jul 30, 2007

Results for the Nine Months Ended June 30, 2007

For the Nine Months Ended June 30, 2007, Republic Bank Limited (RBL) reported impressive Earnings Per Share (EPS) of $6.55. This figure was up by an outstanding 143.49 per cent or $3.86 on the corresponding period in fiscal 2006. However, it should be noted that there was a gain of $370.12 million on the sale of the Bank’s shareholding in FirstCaribbean International Bank (FCIB) included in these results. The Chairman has stated that excluding this gain, the Bank’s core operating profit would have increased by a healthy 20 per cent.

Net Interest Income for the Nine Month period stood at $1.23 billion, up 14.84 per cent or $159.42 million on the comparable figure for FY06. For Q307 this figure was $425.62 million, up by a marginal 2.88 per cent on the previous quarter- Q207. While Q307 on Q306, this figure grew by 13.25 per cent or $49.80 million. Other Income for the period under review totaled $737.89 million, up a significant 16.80 per cent on same period in the last financial year. However, Q307 on Q207, Other Income fell by 12.67 percent from $263.75 million to $230.34 million. Thus, the Bank’s Total Income for the Nine Months Ended June 30, 2007 ended at $1.97 billion showing a 15.57 per cent growth on the corresponding period in FY06.

Loan Impairment Expense amounted to $69.67 million and was up by a significant 283.10 per cent on the Nine Month period in FY06. However, the bulk of this impairment expense was reported in the second quarter of FY07 and amounted to $41.89 million. For Q307, this figure stood at $14.70 million. Operating Expenses amounted to $959.41 million and saw a much smaller increase, up 8.29 per cent or $73.44 million on the Nine Months Ended June 30, 2006. As a result, Profit Before Taxation for the Nine Month period ended at $1.31 billion, up a substantial 97.06 per cent or $646.46 million on the corresponding period in FY06.

The Effective Tax Rate for the period under review was 14.78 per cent compared to a Tax Rate of 25.37 per cent for the same period in FY06. Thus Net Profit After Taxation amounted to $1.12 billion, up 125.02 per cent on the same figure for the comparable period in FY06.

RBL’s shares are currently trading at a price of $80.00 on the local market. In light of the current results, we are increasing our forecasted EPS for FY07 to $8.05. While this forecasted EPS would result in an attractive price to earnings multiple of approximately 10 times, the earnings from core operations should be used for analysis. Thus, if we adjust for the gain, the forecasted EPS from core earnings would be approximately $5.75 which translates into a P/E multiple of 14 times. As such, we continue to recommend a HOLD on this share.


Gia Singh
WISE Equity Research Team