Jul 2007 Financial News

RBTT Releases First Quarter Results

Jul 31, 2007

RBTT Financial Holdings Limited (RBTT)
WISE is a subsidiary of RBTT Financial Holdings Limited

Results for the First Quarter Ended June 30, 2007

For the First Quarter Ended June 30, 2007, RBTT Financial Holdings Limited (RBTT) reported Earnings Per Share (EPS) of $0.66, up 4.76 per cent or $0.03 on the comparable EPS for FY07. However, when compared to Q407, the quarter under review was down 15.38 per cent or $0.12 from $0.78 to $0.66.

Net Interest Income for the quarter was $487.40 million, up 10.37 per cent or $45.78 million on the corresponding figure in FY07. Q108 on Q407 however saw a marginal decline in Net Interest Income as this figure fell 0.10 per cent or $0.48 million from $487.88 million. Other Income for the period under review saw an increase of 8.98 per cent, moving from $241.47 million (Q107) to $263.15 million (Q108). Nevertheless, when Q108 is compared with Q407, this figure fell by 25.92 per cent or $92.07 million from $355.22 million. Thus, Total Net Income ended the quarter at $750.56 million, up 9.88 per cent or $67.47 million from $683.09 million in Q107. Q108 on Q407, this figure fell by 10.98 per cent or $92.54 million from $843.10 million.

For the First Quarter Ended June 30, 2007, RBTT had an Impairment Credit on Loans and Advances and Investment Securities of $20.99 million compared to a credit of $17.88 million on the corresponding period in FY07. While the previous quarter, Q407, saw an Impairment Expense of $9.86 million. The Group’s Operating Expenses totaled $482.73 million for Q108 and was up by 12.96 per cent on the comparable quarter in FY07, while Q108 on Q407 saw a decline of 3.66 per cent. As a result, Operating Profit for the period under review stood at $288.82 million up 5.55 per cent or $273.62 million on Q107.

Share of Profits of Associated Companies and Joint Venture Before Taxation amounted to $1.88 million compared to $3.09 million in Q107, a decline of 39.08 per cent. Q108 on Q407, this figure saw an even greater decline of 68.26 per cent or $4.05 million from $5.93 million. Profit Before Taxation was $290.70 million, up 5.05 per cent or $13.99 million from $276.71 million in the corresponding quarter in FY07. Q108 on Q407 however saw this figure fall by 14.02 per cent from $338.10 million.

The Effective Tax Rate for the period under review was 21.70 per cent compared to a Tax Rate of 21.51 per cent for the same period in FY07. Thus, Profit After Taxation ended the period at $227.63 million up 4.81 per cent on Q107. This figure was down by 15.68 per cent or $42.35 million on the previous quarter, Q407.

The Chairman has stated in his report that the Retail Bank had a strong performance across all its markets. However the Trust and Asset Business continued to be adversely affected by the lack of buoyancy on the local Stock Exchange which resulted in a negative impact on fee income derived from funds under management. The Investment Banking Business had a slow quarter but it is expected to have improved deal flow in the second quarter of FY08.

RBTT last closed at a price of $31.01 on the TTSE. At this time, we are maintaining our Forecasted EPS of $3.00 which at the current price translates into a P/E multiple of 10.34 times. This is an attractive multiple given that this share usually trades in the band of 11 to 13 times. Additionally, using a multiple of 12 times and the forecasted EPS of $3.00, this share has an expected return of approximately 16 per cent on the current price or a target price of $36.00. Thus, based on this analysis we continue to recommend a BUY on this share.

Gia Singh
WISE Equity Research Team