Aug 2007 Financial News

DBG Releases First Quarter Results

Aug 15, 2007

Results for the First Quarter Ended June 30, 2007
All figures quoted in Jamaica Dollars unless otherwise stated

For the First Quarter Ended June 30, 2007, Dehring Bunting & Golding Limited (DBG) reported Earnings Per Share (EPS) of 34 cents, down 29.17 per cent or 14 cents on the comparable EPS for Q107.

Net Interest Revenue for Q108 amounted to $229.08 million, up 14.71 per cent or $29.37 million on the same period in FY07. This increase resulted from strong growth primarily in the Company’s managed fund and loan portfolios. DBG’s loan book, driven by the excellent performance of its Merchant Bank, increased by 33.02 per cent or $994.11 million when compared to the same period last year.

Other Operating Revenue, for the period under review, fell a significant 34.32 per cent or $52.58 million to $100.61 million. According to the CEO, Anya Schnoor, the results should be taken in the context of current market conditions. The equity markets and the bond trading markets for the past quarter were in a bearish mode. As such, Gains on Securities Trading, a major contributor to net profits, fell a substantial 80.46 per cent or $47.21 million to $11.47 million. Also seeing declines was Foreign Exchange Gains which fell 2.71 per cent or $1.22 million to $43.69 million and Fees and Other Income, down 8.36 per cent or $4.15 million to $45.45 million.

As a result, Net Revenue fell from $352.89 million (Q107) to $329.68 million (Q108), a decline of 6.58 per cent or $23.20 million. Conversely, Operating Expenses for Q108 stood at $220.77 million, an increase of 7.27 per cent or $14.97 million.

Q108 on Q107, Profit Before Taxation totalled $108.92 million, down a considerable 25.95 per cent or $38.17 million. The Effective Tax Rate for the period under review was 2.89 per cent compared to a Tax Rate of 0.34 per cent in Q107. Thus, Net Profit After Taxation fell a significant 27.85 per cent or $40.83 million from $146.59 million (Q107) to $105.77 million (Q108).

DBG’s productivity ratio (non-interest expense as a percentage of net revenue) for Q108 was 67 per cent which is above the international benchmark of 60 per cent.

On June 30, 2007 Peter Bunting resigned from DBG as CEO to pursue other personal interest and Anya Schnoor assumed the role of CEO on July 1, 2007. According to the new CEO, her first task is to complete the acquisition of Scotia Investments and its operational merger with DBG in the second quarter. Additionally, DBG received approval from the relevant authorities for the change of its financial year end to October 31, 2007. This was necessary to allow the Company to have a similar financial year end to its parent, the Scotia Group.

DBG last closed at a price of TT$2.15 on the local stock market. Based on these results we are maintaining our forecasted EPS for FY08 of TT$0.24 (JMD2.53). At the current price and the forecasted EPS of TT$0.24, these shares are trading at a price to earnings multiple of 8.96 times. Given that DBG usually trades between 7 to 11 times we currently recommend a HOLD on this share.


Nancy Chen
WISE Equity Research Team