Dec 2007 Financial News

Banking Sector's Latest Results

Dec 11, 2007

Banking Sector’s Latest Results
December 11th 2007

Republic Bank Limited
(Fiscal Year Ended September 30th, 2007)

For the financial year ended September 30th, 2007, Republic Bank Limited (RBL) reported Earnings Per Share (EPS) of $8.33, which was up an outstanding 109.82 per cent on the comparable EPS in fiscal 2006. This phenomenal growth is largely due to the fact that the Bank sold its investment in FirstCaribbean International Bank. Thus, if we exclude this component for both years and compare year on year growth in core earnings, the Bank was still up a significant 18.70 per cent from an EPS of $5.08 (FY06) to $6.03 (FY07).

The Board declared a final dividend of $2.00 which was paid on November 30th 2007. This brings the total dividend for the year ended September 30th, 2007 to $2.94 (2006:$2.50)

RBL last closed at a price of $80.00 on the local exchange. We are forecasting an EPS of $7.25 for fiscal 2008, which is 20 per cent up on the core EPS for FY07. At the current price and this forecast, RBL is trading a multiple of 11.03 times which is low for this Bank. Additionally, using a multiple of 14 times and the forecasted EPS of $7.25, this share has an estimated return of approximately 27 per cent or a Target Price of $101.50. Thus, we recommend a BUY on this share.


Scotiabank Trinidad and Tobago Limited
(Fiscal Year Ended October 31st, 2007)

For the financial year ended October 31st, 2007, Scotiabank Trinidad and Tobago Limited (SBTT) reported Earnings Per Share (EPS) of $2.10 which was up 17.74 per cent on the comparable EPS for fiscal 2006. Year on Year, Net Loans increased by 26 per cent while Deposits increased by 25 per cent.

The Board of Directors has declared a final dividend of 21 cents payable on December 21st, 2007 which brings the total dividends earned for fiscal 2007 to 84 cents per share, 20 per cent higher than that paid in fiscal 2006.

SBTT last closed at a price of $29.99 on the local exchange. We are forecasting an EPS of $2.30 for fiscal 2008, which at the current price translates into a multiple of 13.04 times. Additionally, using a multiple of 15 times and the forecasted EPs of $2.30, this share has an expected return of approximately 15 per cent or a Target Price of $34.50. Thus, we recommend a BUY on this share.



National Commercial Bank (Jamaica) Limited
(Fiscal Year Ended September 30th, 2007)
All figures quoted in Jamaican Dollars unless otherwise stated

For the financial year ended September 30th, 2007, National Commercial Bank (Jamaica) Limited (NCBJ) reported Earnings Per Share (EPS) of $2.68, up 20.18 per cent on the corresponding EPS of FY06.
The Board declared a final dividend for 2007 of $0.17 to be paid on December 12th, 2007. Also, in addition to the final dividend the board declared a special dividend of $0.10 per share to be paid on December 21st, 2007.

NCBJ last closed at a price of TT$2.00 on the local exchange. We are forecasting an EPS of TT$0.28 for fiscal 2008, which at the current price translates into a p/e multiple of 7.14 times. This multiple is attractive for this company since it usually trades in the band of 7 to 10 times. Additionally, using a multiple of 9 times and the Forecasted EPS of $0.28, this share has an expected return of approximately 26 per cent at the current price or a Target Price of $2.52. Thus, we continue to recommend a BUY on this share.


FirstCaribbean International Bank Limited (FCIB)
(Fiscal Year Ended October 31st, 2007)
All figures quoted in US$ unless otherwise stated

For the financial year ended October 31st, 2007, FirstCaribbean International Bank Limited (FCIB) reported Earnings Per Share (EPS) of TT$1.07, up 62.12 per cent on the comparable EPS of fiscal 2006. However, the results for the year under review included a one-time gain of $52.4 million. Thus, if we exclude this gain, the Bank’s core EPS would be $0.85, which would be up 28.79 per cent on the corresponding EPS for FY06.

We are still awaiting the full results from this company, however at this time we continue to recommend a BUY on this share.


RBTT Financial Holdings Limited (RBTT)
(Half Year Ended September 30th, 2007)

For the Half Year Ended September 30, 2007, RBTT Financial Holdings Limited (RBTT) reported Earnings Per Share (EPS) of $1.33, down 0.75 per cent or $0.01 on the comparable EPS for FY07. Q208 on Q207, the EPS was down 5.63 per cent or $0.04 from $0.71 to $0.67. The Chairman attributed the fall in earnings to a significant increase in taxation expense, due primarily to an increase in taxable income and a decline in tax exempt investment income.

The Board of Directors declared an Interim Dividend of 60 cents per share (60 cents- FY07) which was paid on November 22, 2007 to shareholders on record as at November 8, 2007.

RBTT last closed at a price of $34.02 on the TTSE. We have revised our Forecasted EPS downwards to $2.80. At the current price and revised Forecasted EPS, this share is trading at a price to earnings multiple of 12.15 times. Given that this share usually trades between 11 to 13 times in addition to the fact that there is a transaction pending, we recommend a HOLD at this time.

Gia Singh
Senior Research Analyst