Profit after tax buoys Scotia, ‘Hold’ FCIB shares

Scotiabank Trinidad and Tobago Limited results for the nine months ended July 31, 2003

Scotiabank’s (SBTT’s) third quarter performance in 2003 was lower when compared with the similar quarter in 2002.  Overall, the results for the nine months were 11.2 percent better in 2003, when compared with the similar 2002 period. 

Net interest and other income was 6.5 percent higher in 2003 at $393.6 million, while in 2002 the corresponding figure was $369.6 million.  Non interest expenses rose 9.9 percent to $191.2 million in 2003 when compared to the $173.9 million incurred a year earlier during the same period.  The two significant areas here were loan loss expenses and other expenses.  Other expenses rose 74.3 percent to $39.6 million in 2003, while loan loss expenses fell 32.7 percent to $18.9 million.  The decrease in loan loss expenses were the result of write-backs of bad debt, rather than decreases in write-offs.  In terms of other expenses, SBTT incurred some ‘costing initiatives,’ which led to the increase in cost. Net income before taxes improved 3.4 percent to $202.3 million at the end of the third quarter of 2003.  This was in comparison to the $195.7 million posted for the same period in 2003.  The effective tax rate declined to 28.3 percent in 2003 from 33.3 percent in 2002.  Profit after taxes rose 11.2 percent to $145.2 million in 2003 in comparison with the previous year’s $130.5 million. 

Earnings per share for the three completed quarters in 2003 was $1.23, compared with the $1.11 recorded in the same period in 2002.  The Managing Director referred to ‘focused treasury management’ as the main driver of SBTT’s continued profitability.  The current excess liquidity is forecast to exert downward pressure on interest rates.  This will no doubt challenge management to seek out the best opportunities for their excess funds. With the above environment in mind, we therefore revise our forecast EPS to $1.70, together with a total dividend pay out of 75 cents per share.   

First Caribbean International Bank Limited For the nine months ended July 31, 2003
All figures are in BDS$’000

Please note the results for 2003 are for nine months of First Caribbean International Bank Limited to July 31, 2003 while the comparisons for 2002 are the actual nine months results for CIBC WI Holdings (Excluding Cayman Wealth) and normalised nine months results for Barclays Caribbean Operations to July 31, 2002. The Bank has stated that it continues to suffer the consequences of difficult market conditions and the slackening of loan demand.  Net interest income for the nine months ended July 31, 2003 was $377.613 million, a decline of 7.75% over the corresponding 2003 figure of $409.323 million. 

Non interest income declined marginally from $172.371 million in 2002 to $171.202 million in 2003.  Overall total income declined by 5.65% moving from $581.694 million in 2002 to $548.815 million in 2003.  Non interest expenses and provision for credit loss declined marginally.  Integration cost reached $31.420 million.  Overall operating profit declined by 31.86% moving from $200.410 million in 2002 to $136.550 million in 2003.  Another new cost item was the amortisation of goodwill which reached $23.784 million.  Overall net income achieved was $96.895 million, a decline of 44.69% over the corresponding 2002 figure of $175.188 million.  If the goodwill and integration cost is backed out the decline in net income drops to 13.18%. The earnings per share for the nine months ended July 31, 2003 was 6.3 cents as compared to 11.7 cents in 2002.  We maintain our full year earnings forecast of 10 cents per share and our hold recommendation.  The Bank not only has to contend with the cost of integrating the two operations, but also the weak economies in which it operates.

BWIA West Indies Airways Limited
results for the six months ended June 30, 2003

The National Airline continued to endure some difficult times in the first half ended June 30, 2003.  Operating revenue was down by 9.7 percent in the first half of 2003 to $705.7 million, compared to the similar period’s 2002 figure of $781.3 million.  As a result of some stringent cost cutting, operating expenses declined by 5.0 percent to $767.6 million in 2003 from the $808.3 million incurred in 2002. The operating loss more than doubled in the first half of 2003 to $61.9 million in 2003 from the 2002 amount of $27.0 million.  Losses after taxation amounted to $84.3 million in 2003, while in the corresponding 2002 period, the loss was 54.6 million.  BWIA’s loss after taxes and minority interest reached $85.9 million in the first half of 2003.  In 2002 the comparable figure was $54.3 million. The July to September quarter is the best period for BWIA with the usual two-way passenger traffic.  We however remain guarded on the near-term prospects of the airline, given initiatives by the Government of Trinidad and Tobago (GORTT) and a possible partnership with another regional carrier.