Aug 2007 Financial News

CCMB Releases Half Year Results

Aug 16, 2007

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

For the Half Year Ended June 30, 2007, Capital & Credit Merchant Bank Limited (CCMB) reported Earnings Per Share (EPS) of 44 cents, down a significant 41.33 per cent or 31 cents on the corresponding EPS of 75 cents. Additionally, Q207 on Q206, the EPS was down 1 cent or 4.76 per cent from 21 cents to 20 cents. The EPS reported in Q107 was 24 cents, thus Q207 was down on the previous quarter by a considerable 16.67 per cent or 4 cents.

Gross Operating Revenue for the Half Year period stood at $2.78 billion, down a significant 54.25 per cent or $3.29 billion on the same period in the last financial year. Interest on Investments was down by a similar margin of 56.16 per cent moving from $4.54 billion (HY06) to $1.99 billion (HY07). However, when Q207 is compared to the previous quarter (Q107), both Gross Operating Revenue and Interest on Investments showed growth, up 3.56 per cent and 5.14 per cent, respectively. HY07 on HY06, Interest on Loans fell 23.76 per cent from $486.41 million to $370.85 million. However for Q207, this figure was $208.58 million, up on Q206 by an outstanding 98.66 per cent or $103.59 million. Also, quarter on quarter, Interest on Loans increased by 28.54 per cent from $162.27 million (Q107) to $208.58 million (Q207). Interest Expense for the period under review was $2.00 billion, down a marginal 1.47 per cent or $29.82 million. However, Q207 on Q107, this figure rose by 8.13 per cent from $961.76 million to $1.04 billion. Consequently, Net Interest Income for the Half Year Ended June 30, 2007 was $359.30 million, down a substantial 31.19 per cent or $162.89 million on the same period for fiscal 2006. Q207 on Q107 however saw an increase in this figure which moved from $170.64 million to $188.66 million.

Commission and Fee Income for HY07 was $49.72 million, down 4.69 per cent or $2.45 million on the comparable figure in HY06. Net Gains on Securities Trading was down by a larger margin of 22.05 per cent from $405.42 million to $316.04 million. Foreign Exchange Trading and Translation amounted to $21.05 million after falling 5.04 per cent or $1.12 million from $22.17 million for HY06. Dividend Income, however, saw a large increase of 254.10 per cent or $17.72 million to end the Half Year at $24.70 million. Other Income ended the period at $4.17 million, down 45.37 per cent or $3.46 million from $7.63 million.

Staff Costs was the largest Non Interest Expense for the Half Year period, up 8.04 per cent or $18.22 million to $244.92 million. Additionally, Q207 on Q206, this figure was up 49.51 per cent or $41.18 million from $83.17 million to $124.36 million. Loan Loss Expense saw the largest increase in None Interest Expenses, up 340.64 per cent from $2.61 million to $11.51 million. Depreciation for HY07 amounted to $11.68 million down 8.77 per cent on HY06, while Other Operating Expenses stood at $162.67 million for HY07, down 9.77 per cent on the same period in FY06. As such, Profit Before Taxation ended the period at $344.19 million, down 42.07 per cent or $249.96 million on HY06.

The Effective Tax Rate for HY07 was 18.81 per cent compared to a Tax Rate of 19.52 per cent for HY06. Profit After Taxation for the period ended at $279.44 million, down 41.56 per cent or $198.75 million from $478.19 million for HY06.

CCMB last closed at a price of TT$1.00. In light of the current results, we are revising our Forecasted EPS downwards to TT$0.08 (JMD0.84). At this forecast and the current price, this share is trading at a price to earnings multiple of 12.5 times, which is high for this Company. Thus, we recommend a SELL on this share.

Gia Singh
WISE Equity Research Team