Company Results — Page 82

39% hike for NCB dividend

January 28, 2014 by IC Insider.com

The Board of Directors of National Commercial Bank (NCB) announced a 39 percent hike in the latest dividend that has been declared. The banking group will be paying the interim dividend of 32 cents per ordinary stock unit on February 20, 2014 to stockholders on record as at February 7, 2014. Last year, NCB’s first dividend for the year was 23 cents that was paid in March and on May 24, 16 cents per share.

NCB also reported earnings for the first quarter to December indicating that operations are back to normal coming out of 2013 when profits were negatively impacted by the government debt swap. Profit after tax came out at $2.856 billion versus profits of $2.786 billion and for the September 2013 and $1.778 billion after writing off some large one-time expenses. Earnings per share amounted to $1.16 and should reached around $5 for the year, barring any major negative developments.

Total revenues climbed by 15 percent to $13.75 billion compared to $11.967 billion.

While net revenues grew from $9.16 billion to $10.47 billion, expenses grew from $5.78 billion to $7.34 billion resulting in reduced operating profit of $300 million. A $301 million gain from on acquisition of a subsidiary counter balanced the reduced operating profit. Bad loan provision was down from $563 million to $390 million, but policy holders cost climbed by a billion dollars with the acquisition of Advantage General Insurance Company.

Looking forward, loans grew 27 percent or $31.8 billion to $148 billion from December 2012 and deposits were up 10 percent to $194 billion.

Filed Under: Company News, Company Results, Dividends Tagged With: JSE Company, NCB

Carib Cream making headways but…

January 24, 2014 by IC Insider.com

Caribbean Cream, the ice cream maker, is making headways as profits made big jump with an increase of 5,000 percent to reach $11 million in November 2013 quarter, up from only $222,000 after tax in the 2012 November quarter. Profit before tax was $3.9 million in the 2012 but as a recent Junior Stock market listing, the company is not subject to corporate tax in 2013.

The revenue improved 14 percent from $165.5 million to $188.8 million for the November quarter. However, sharp rises in electricity, depreciation, audit and accounting, security and other administrative and interest cost robbed Caribbean Cream of a better bottom line. Nevertheless, the company saw a 186 percent increase in profit before tax for the quarter, and for the 9 months, profit is up 45 percent to $28.7 million compared with $19.8 million in 2012.

Administrative cost rose sharply by 50 percent for the nine months to $80.86 million up from $54 million in 2012. This is of concern as it has risen too fast and has partially eroded the improvement generated in the revenue growth.

The company was able to squeeze more gross profit out of the operations this past year with a margin of 37 percent for the quarter, surging over the 24.7 percent of 2012 and 29.6 percent year-to-date compared to 26 percent for the same period in 2012. The latest quarter revenues reflected the lowest growth rate for the year-to-date with the February and April quarters climbing by 48 percent each and 27 percent for the July quarter.

Impressive as the growth in profit is, earnings per share was only 8 cents for the nine months, which is inadequate to drive interest in the stock even with management’s promise of continued expansion in retail outlets and growth in sales as well as the reduction in production cost due to the installation of new machinery.

Our estimate for earnings for the current fiscal year is 15 cents, and for the next year 50 cents. There is quite some room for the stock to appreciate during this year barring some bad quarterly results.

Filed Under: Company News, Company Results Tagged With: JSE Company

Berger keeps profit gains

January 21, 2014 by IC Insider.com

Berger Paints reported continued gains in profit for the current year which ends in March with a 30.7 percent increase for the December quarter and 33.7 percent for the nine months period.

The growth for the period is down on the performance to September last year when profit was up 80 percent for the six months and revenues grew by 12 percent after a 17.8 percent jump in the September quarter. Revenues gained only 6 percent for the December quarter and 9.3 percent year to date. Cost reduction would have facilitated to robust increase in net profit out turn. Profits after tax amounted to $51 million from the quarter versus $39 million in 2012 and $64 million year to date compared to $48 million in 2012 on revenues of $622 million for the quarter and $1.409 billion for the nine months. The information was disclosed in an abridged version of the interim report that provided no details of expenses.

Berger has current assets of $792 million at the end of December and current liabilities of only $149 million with equity capital of $522 million.

After paying a dividend of $27.86 million in July, the company had cash on hand in December amounting to $58 million that is down from $163 million at the end of December 2012 and $130 million at the end of the March 2013, but the cash position is an improvement over the $33 million on hand at the end of September.

A lot of Berger’s fortunes are tied to the buoyancy of the construction sector. The sector had not been performing well since 2008 and that has weighed down on the company’s fortunes. The moderate increase in the monetary value of sales is a reflection of the challenges they face. What has been the major attraction for the stock is the tendency for a high dividend payout that enhances the rate of return on investment for outside investors.

Filed Under: Company News, Company Results Tagged With: Berger Paints, JSE Company

Scotiabank T&T making headway slowly

December 31, 2013 by IC Insider.com

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Most banks in the English speaking Caribbean are facing challenging economic environment with slow growth and moderate increase in profits.

The stalemate in the Trinidad & Tobago economy has not left Scotiabank out of its reach. The bank is reporting net income after tax of $561 million for the year ended 31 October 2013, an increase of $15.6 million or 2.9% over the same period last year. The profit flowed from revenues of $1.389 billion in net income versus of $1.287 billion in 2012. Of note is the increase in income in the last quarter of $384 million or 16 percent over the $331 earned in 2012. The increased income came all from other income not net interest.

Profits after tax rose by 11 percent or a faster pace than the full year’s growth and may be an indication that the pace of growing profits may well be picking up. However, the pace is so low that a clearer picture may have to await the first quarter results. There was no growth in the main income generator of lending with loans standing at $10.576 billion at the end of the year compared to $10.45 as of July but from $9.96 billion at the end of October 2012. Total Assets ended the period at $19.5 billion, representing growth of 10.2% or $1.8 billion over the comparative period in 2012.

“Conditions in the domestic economy remain challenging, with continuing margin compression due to persistently low interest rates and high liquidity. It is against this backdrop that the Bank continues to focus on growing income through building and maintaining strong customer relationships and diversification of its revenue base through the launch of new products and services. Our strategies to manage credit quality and recoveries continue to bear fruit as evidenced by the reduction in credit losses year over year. Finally, we continue to manage expenses while ensuring we invest in our brand, people and infrastructure” management reported to shareholders.

On the basis of the results, Directors resolved that the Bank pay a fourth interim dividend of 40 cents per ordinary share and a special dividend of 30 cents (32 cents in 2012, plus a special dividend of 28 cents) on 7 January 2014 to shareholders on record at 9 December 2013.

Filed Under: Company News, Company Results Tagged With: Scotia, TTSE

FCIB gets punched

December 30, 2013 by IC Insider.com

For the fiscal year ending October 2013, First Caribbean International Bank generated $530 million in revenue, down from $543 million in 2012 but reported lousy net results of a loss for the year of $27.5 million compared with a profit of $72 million in the prior year.

The Bank would have generated $29.6 million of net income for the year but results were affected by a number of factors. Of note they incurred $37.6 million ($35.5 million after-tax) of restructuring expenses and an increase in the collective allowance for loan losses of $25 million ($21.6 million after-tax). The bank took a $151 million loan loss hit, an increase from $120 million in 2012. The 2013 write off is 2.4 percent of the net loan of $6.3 billion with loans falling from $6.8 billion in 2012.

FCIB saw operating expenses going in the opposite direction to income as expenses grew from $348 million in 2012 to $403 million but the 2013 amount would include the restructuring cost mentioned above.

Total assets also declined to $11.4 billion from $11.5 billion in 2012. Customers’ deposits remained at $9.6 billion, roughly the same as the year before. (All figures are in US dollars).

The bank, in its report to shareholders, states that “Many of the economies in which we operate rely heavily on tourism and foreign direct investments. The overhang from the economic crisis continues to impede growth and by extension has negatively affected our results. Loan loss provisions this quarter were higher than normal and include an increase in the collective allowance. The Bank is focused on pursuing risk-controlled growth and has taken considerable steps during the year toward the goal of becoming a lower risk bank. While never easy in these difficult times, we have also taken the decision to right size the organization, to redefine how we operate and to address our cost structure. The restructuring we are undertaking will position us for future cost savings and give us the ability to serve our customers better. As we continue to pursue our strategic priorities, our Bank has recorded some significant successes this year. We have introduced new and relevant products to better serve our clients and continue to leverage the capabilities of our parent and majority shareholder, CIBC.

Our focus on addressing operational and administrative concerns has also led to improvements in the client experience”.

“Our Wholesale Banking segment has recorded significant strides in client service delivery. During 2013, we have significantly removed operational and administrative activities away from the front-line personnel to ensure Corporate Managers and Client Service Officers allocate more time to work and interact with, and provide solutions to clients. We have also streamlined and strengthened our credit adjudication processes to further enhance efficiency. In our Retail and Business Banking segment we have invested heavily in developing a series of products and services to enhance our customer experience”.

The bank states that, “We have also continued our investment in upgrading our branches and network of Instant Teller machines. Focusing on customer experience, we have expedited our account opening times through an innovative continuous improvement process. In the Wealth Management segment we have leveraged the strong Axiom Mutual Funds capability in our parent and majority shareholder, CIBC, to manufacture a Caribbean based version of these funds suitable for international investors who have funds and wealth managed through the Caribbean. We have also strengthened our capability to service our Wealth Management clients with the integration into our bank of the CIBC Bank & Trust business, located in the Cayman Islands and the Bahamas, further widening the scope of clients we can assist and the range of services we can provide”.

A final dividend for the year of $0.015 per share was declared. With some of the cost not likely to recur and reduction in others flowing from the restructuring, profits should pick up in 2014 if the asset base can be held and no more major loan write down.

Filed Under: Company News, Company Results Tagged With: First Caribbean, JSE Company, TTSE

Barita – look beyond 2013 profit

December 20, 2013 by IC Insider.com

Investors can lose out on some incredible investment opportunities if they focus too much on headline reports. This is true of the latest annual results for Barita Investments.

With a drop in the 2013 profits to September of $70.3 million, one would be tempted to dump the stock. However, a deeper look into the numbers says it’s a big buy. On the surface it looks disastrous, but when the one-off investment loss of $240 million is taken into consideration, a far different picture emerges. Barita reported a $196 million in loss on sale of Investments in its latest results versus $255 million in 2012. The investment loss, which is before corporate taxation, arose from the swapping of government bonds for new lower yielding ones. When this is factored in, earnings would have been around $230 million for the year or just slightly lower than the 2012 out turn.

The company incurred a small loss in the last quarter having reported a profit of $78.6 million up to June. The figures also indicate a loss of $79 million on disposal of investments in the last quarter on top of the $117 million reported to June this year. Going forward, Barita should not encounter another debt exchange charge and should recover from the reduction in interest rates on the government paper.

Net interest income jumped to $111 million in the final quarter compared to $76 million in the June quarter and $76 million in the final quarter of 2012 fiscal year, a positive development that means that the company has gotten back the interest rate spread to where it should be.

This is a classic case of “buy when blood is in the streets”. The only major thing that has changed in the company over the last year relates primarily to the losses picked up from the debt exchange. This is a not a recurring item and the results should be adjusted to get a proper perspective of the stock’s value. Accordingly, normalised earnings should be around 60 cents per share for the year just ended, rather than 16 cents reported.

Expenses | Expenses were kept under control during the year but much of this may have been due to the impact of the debt write off on profits forcing the company to keep costs down, like reduced bonus compensation based on lower profits. Staff cost fell from $251 million in 2012 to $217 million in 2013, while administrative cost rose by $12 million to $218 million. Taxation fell sharply from $93 million in 2012 to only $222,000.

IC Insider projects earnings of 90 cents per share for the 2014 year.

Finances | The value of shareholder’s equity fell sharply from $1.7 billion in 2012 to $1.4 billion in 2013. Total assets amounted to $13.17 billon just slightly less than the $13.56 billion held at the end of September 2012. Securities of just over $12 billion is included in the assets. On the liability side, repurchase agreements make up $11.6 billion. Not included in assets are the unit trust funds managed by Barita Units Trust Management Company.

Barita Investments is an IC Insider Buy Rated stock.

Related posts | Profits up at Barita | NDX hits out Barita’s profit

Filed Under: Company News, Company Results Tagged With: Barita Investments, JSE Company

Neal & Massy profits up

December 16, 2013 by IC Insider.com

Neal & Massy one of IC Insider’s Buy Rated companies, delivered slightly better results at the end of the fiscal year to September 2013 than our forecast, due primarily to reduction in corporate taxes in the final quarter.

The Trinidad based group reported profit after tax of $142 million in the 2012 September quarter and recorded an increase of 19 percent $168 million profit in the September quarter of 2013. However, taxation in the quarter fell from $98 million in 2012 to only $58 million in 2013 and was the only reason for the improved bottom-line in the quarter as profit before tax of $243 million in 2013 was virtually flat with $241 million earned in 2012.

Full year Profit | For the twelve months to September, profit before tax moved from $544 million to $611 million, an increase of 12 percent from continuing operations. Profit after tax for the same period moved from $496 million to $556 million from all operations and excluding losses in a discontinued business which was sold. Earnings per share is $5.73, making the stock more attractive than IC Insider’s forecast of $5.40. Profits were generated on sales of $2.34 billion versus $2.17 billion in the last quarter of 2012 and $9.4 billion for the year compared with $9.15 billion in 2012. This is not much change at all, leading to nearly flat pretax profit and suggests challenges in moving profit forward in 2014.

Image courtesy of StuartMiles/FreeDigitalPhotos.net

Tough environment | The reality is that the group operates in economies that are undergoing no growth or slow growth except for Guyana where GDP growth was 4 percent during the period. Neal & Massy was able to eke out a 7 percent growth in revenues in Trinidad but suffered declines of 4 percent in Barbados and Jamaica while Guyana rose by 4 percent. Profit from the region shows mixed performances with Barbados showing increase of 6.5 percent in spite of a fall in revenue, Trinidad recorded an increase of 4 percent but less than that of revenues while Jamaica’s profit fell worse than the decline in revenues at 24 percent, due partially to devaluation of the local currency. Guyana grew by 13 percent.

Plans | “Throughout 2013, the group made major strides in implementing its strategy. Its business unit successfully executed acquisitions, such as Caribbean Insulation Services, implemented innovative retail concepts, initiated projects to expand into new sectors such as petrochemicals, and launched new products and services, Furthermore the group made good progress in diversifying into new territories in Central and Latin America with specific acquisition currently underway,” management stated in their report to investors.

Neal & Massy declared a dividend based on the results, bringing the total dividend for the year to $1.75 up from $1.50 paid in 2012.

Outlook | “In light of the improved results and the strong outlook for the group” is how management described the group’s performance when declaring the dividend. Regardless, based on its dominance in their main market of Trinidad and with Barbados being put through greater austerity in 2014 than in 2013, growth is likely to be slow even as the Jamaican market is expected to emerge from recession with no new major taxes expected during the coming year. Earnings could grow 30 percent for the 2014 year thus putting profit at around $710 million or $7.33 per share. The forecast is in line with growth in profit after tax in 2012 and 2010. In 2011, profits got hit with a $300 million one-off charge, which resulted in a fall in after tax profit. The forecast is also consistent with growth level between 2004 and 2008, the year when the world-wide economic crisis commenced.

Finances | The group is financially strong with shareholders’ equity at $3.85 billion at the end of the financial year against borrowed funds of $1.3 billion and cash and equivalents of $1.1 billion. Current assets of $4.4 billion was adequate to fund current liabilities of $3.1 billion.

TheGroup’s stock, which last sold on the Trinidad market at $60, is undervalued based on its peers, the overall market valuation and its prospects for increased profit in 2014. One caution for investors is the tendency for conglomerates to be hit with surprises that can affect the profit markedly. The group got rid of the loss-making hotel operation in 2012 and so far, there is no mention of any major areas of concern.

Neal & Massy is an IC Insider’s Buy Rated stock.

Filed Under: Company News, Company Results Tagged With: TTSE

JMMB Q2 profits jumps 56%

December 16, 2013 by IC Insider.com

Jamaica Money Market Brokers (JMMB) reported continued strong growth in profits attributable to shareholders in the September quarter of $697 million or a 24 percent increase over the September quarter last year.

The performance is even better than first appearance as there was a gain relating to the acquisition of Capital & Credit Group of $117 million in the September 2012 quarter. Without this gain, profits for this year’s quarter would have been up by 56 percent. This comes against the background of a big jump in profits from ongoing operations for the first quarter to June this year with profit after tax and due to shareholders of $753 million. Earnings for the six months hit $1.45 billion compared to $2.5 billion. The latter includes the booking of the difference between the purchase price and net asset of Capital & Credit Group, which was acquired in the June quarter 2012 amounting to $1.6 billion; excluding this item, profits would be up an impressive 59 percent.

Earnings per share of 43 cents for the latest quarter is up to 89 cents for the six months. The investment bank continues on track to rake in profits of around $2 per share for the year to March 2014, which makes the stock cheap at the last selling price of $8. However, this depends on a number of factors, the most of which is the level of investments and foreign exchange gains they are likely to book in the next two quarters.

Net Interest | For the September quarter, net interest income grew slightly to $1.23 billion from $1.196 billion in 2012 and from $1.178 billion in the 2013 June quarter. For the year to September, net interest income is up to $2.4 billion from $2.18 billion in 2012. Gains on securities trading almost doubled to $646 million from $333 million for the quarter compared with 2012 and from $633 million in 2012 to $1.3 billion in 2013. Net operating income was up strongly to $2.09 billion in the quarter from $1.7 billion in 2012 and for the six months $4.16 billion versus $3.1 billion in 2012. Operating expenses remained fairly stable at $1.2 billion in the latest quarter compared with to $1.13 billion in the first quarter and $1.1 in the 2012 September quarter. Year to date expenses climbed to $2.34 billion from $1.88 billion in 2012.

Regionally, Dominican Republic contributed J$754.6 million to the Group, driven mainly by growth in Net Interest Income and gains on securities trading compared to J$390.9 million in the first quarter. The Trinidad & Tobago based IBL Group, an associated company, contributed a loss of $$24.3 million due mainly to additional provisioning for loans. The Group has already stated that they have agreed to acquire the shares held by the other shareholder in the bank.

Financial Strength | Shareholders’ equity declined from $18.7 billion at the end of June to $16.5 billion at the end of September as a result of a fall in the value of investments. The group’s total assets under management fell to $172.4 billion at the end of September versus $175 billion at the end of June. Loans having increased by 17 percent to $12 billion to June, contracted slightly in September to $11.7 billion. Loans are a relatively small part of the asset base but could be one of the more profitable and fastest growing areas of its operations if lending is done smartly to minimize losses. Importantly, the full ownership of IBL will increase loans sharply when the group reports results for the December quarter.

JMMB is a financial conglomerate with the principal activities being securities brokering, securities trading, commercial and merchant banking, dealing in money market instruments, operating foreign exchange cambio and managing funds on behalf of clients.

JMMB is an IC Insider Buy Rated stock.

Related posts | JMMB grows assets $125B to $200B | JMMB big bump in profits |

Filed Under: Company News, Company Results Tagged With: JMMB, JSE Company, TTSE

Profit up 22% at Jamaica Broilers

December 12, 2013 by IC Insider.com

Profit after tax due to the Jamaica Broiler’s shareholders, which was up 10 percent in the first quarter to August, is up 22 percent in the October quarter.

Profit was flat in the first quarter, before taking out losses due to outside shareholders of a subsidiary, and was 15 percent ahead of the 2012 second quarter period. The improved results flowed from increased revenues of 20 and 21 percent respectively in each quarter. For the half year, profit hit $324 million or 27 cents per share and in the October quarter, the company reported $184 million versus $151 million in 2012 or 15 cents per share in profits. With the Christmas period ahead, they are now into the best period for revenues and profit. IC Insider’s forecast is now at $1.50 earnings per share for the year, down from an earlier forecast, but cost savings are expecting from the acquisitions, particularly the US based one. Earnings should exceed $2 by 2015 fisscal year. The stock still remains Buy Rated.

The group enjoyed improved gross margins in the second quarter to 29 percent versus 23.4 percent in the first quarter and 26 percent for 2013 fiscal year that ended in April.

The group completed the acquisition of Hamilton Smokehouse and England Farms Inc. during the latest quarter, which resulted in increased income as well as increased cost. Administrative cost rose by 33.5 percent in the October quarter to $923 million and 23 percent for the year to October to $1.43 billion; distribution cost jumped in the last quarter by 39 percent to $335.7 million and 33 percent for the two quarters to $615.6 million. Those were not the only costs to rise, finance cost jumped by 20 percent in the last quarter to $88 million and by 35 percent in the year to date to hit $167 million.

Segments | Poultry sales rose 15 percent to $7.2 billion over 2012; Hi Pro sales which includes feeds was down 1 percent for the half year but ethanol fell 39 percent to $445 million; other operation category is up 75 percent while US operations show a 221 percent jump to $2.15 billion, partially reflecting the new acquisition in the quarter. Other income rose from $68 million to $86 million. Segment results came out at $436 million for poultry, up from $350 million in 2012; Hi Pro recorded $310 million down from $501 million in 2012; ethanol recorded $27 million, in 2012 a loss of $7.5 million was recorded; and the US operations recorded an impressive $202 million compared to only $19 million in 2012.

Balance Sheet | Fixed assets increased by $700 million net of depreciation charge over April due mainly to the acquisitions noted above; intangible assets increased by $455 million and goodwill by $133 million all due to the US and the Hamilton Smokehouse acquisitions. Inventories rose $300 million over the position as of April this year; biological assets moved up by $640 million and receivables and prepayments by $560 million. Cash funds are down $1.1 million at the end of October to $1.1 billion; loans however climbed by $400 million to $5.8 billion, this compares with equity of $10.3 billion. Current assets amounted to $9.2 billion and is well ahead of current liabilities of $5.3 billion, which is a slight deterioration from the level of $8.8 billion in April to $4.2 billion in current liabilities.

Jamaica Broilers Group is an IC Insider Buy Rated Stock.

Image courtesy of Amenic181/FreeDigitalPhotos.net

Filed Under: Company News, Company Results Tagged With: Jamaica Broilers, JSE Company

Republic growth struggle

December 11, 2013 by IC Insider.com

Trinidad’s Republic Bank recorded profit attributable to shareholders of TT$1.17 billion for the year ended September 2013, an increase of only $11 million over 2012.

The performance reflects an operation that is highly influenced by the poor state of some of the economies the group operates in. While profit inched up in 2013, it is still below the $1.2 billion generated in 2008 and $1.34 in 2007 but well above $948 earned in 2009. Recovery has been slow as the main income generator, loans have been growing slowly. Things could pick up somewhat as its main market, Trinidad, has returned to positive growth but Barbados should continue to be tight with high fiscal constraints in place.

“Profit declined by $23.3 million or 29.6 percent in Barbados and a loss of $18.2 million was recorded in Grenada, mainly due to higher level of provisions for loans and investments and a general decline in business activities in both islands. In addition, a loss of $75.7 million was recorded on our investment in Eastern Caribbean Financial Holdings Limited. Improved performance in the commodity-exporting economies of Trinidad and Guyana off-set these declines.”

Republic saw losses for non-performing loan drop from $103 million to $57 million in the 2013. Net interest income barely moved ending at $2.18 billion up from $2.14 billion in 2012. Other income performed more robustly, moving from $1.1 billion to $1.26 billion in 2013. Operating expenses climbed 7.5 percent to $1.74 billion, a faster rate than revenues. The tax charge went up by 25 percent or $76 million to $383 million, well ahead of the pretax profit that increased by $46 million.

Based on the results, a final dividend of $3 per share and $1.25 interim dividend was paid for the year.

Investments | During the year, the remaining 34.86 percent minority shareholding in Republic Bank (Barbados) was acquired and a 40 percent shareholding was acquired in HFC Bank (Ghana). “Republic will continue to look at opportunities in the African continent that meet our risk profile as we seek to expand from this initial investment,” the company stated.

Financial Position | The Group’s total asset base stood at $57.6 billion with equity at $8.3 billion. Total liquid assets, which was fuelled by increase in deposits of $5.0 billion or 13.5 percent, stood at $19.8 billion at year end, an increase of $3.3 billion or 20.2 percent from 2012. Loans and advances grew by $1.9 billion or 8.2 percent to reach $25.2 billion following a growth of 6.6 percent in 2012. All territories achieves growth, led by Trinidad and Tobago with an increase of $1.6 billion or 10.2 percent, which accounted for 84.5 percent of the increase compared to the prior three years of flat growth.

Non-Performing Loans (NPLs) is at 1.4 percent for Trinidad and Tobago, the best in the Group and below the industry average in Trinidad and Tobago of 4.7 percent. However, Trinidad and Tobago which accounts for 68.9 percent of the Group’s net interest income, increased this category by 3.1 percent in 2013, after declining by 8.7 percent in 2012, primarily because of increase in loans and investments balances.

NPLs in Barbados at 11.7 percent and Grenada at 8.2 percent respectively are high and reflective of the poor economic conditions, leading to a higher overall Group NPLs of 3.7 percent.

Non-Performing Loans (NPLs) to gross loans stood at 3.7 percent. The NPL ratio rose by 4 basis points, mainly as a result of increased NPLs in Barbados and Grenada, but down from the 4.6 percent in 2009. Total specific provision as a percent of total NPLs is 37.2 percent, down from the 50 percent in 2012, mainly because of the higher level of collateral held for loans downgraded resulting in lower provisioning requirement.

Outlook | “We expect that economic conditions will be tough going forward. Nonetheless, barring any unforeseen event, we are confident that the current level of profitability will remain robust. The commodity exporting economies of Guyana and Trinidad are expected to drive our performance while tourism dependent economies of Barbados and the Eastern Caribbean are expected to face ongoing challenges with little or no growth. We remain cautiously optimistic that these economies will achieve growth in the near term as global economic conditions improve.” management concluded.

The group has much capacity for increased lending with only 60 percent of deposited funds lent out and is at the lowest level since 2003 when only 61 percent was lent and is well down from 72 percent lent out in 2008. Loan growth in the September quarter suggest that lending could increase around $3 billion for the current year. A faster pace than in 2013 and would help grow income at a level to beat the rise in costs. On the basis of the likely growth in loans, IC Insider is forecasting earnings of $9.50 cents per share for the 2013/14 fiscal year.

Republic Bank is an IC Insider Buy Rated stock