Hurricane Ivan strips RBTT profits, shareholders take a beating

RBTT Financial Holdings Results for the six month period ended September 30, 2004. WISE is a Subsidiary of RBTT Financial Holdings Limited

RBTT Financial Holdings reported marginal growth for the six-month period ended September 30, 2004. Profit attributable to shareholders increased by 0.31 per cent from $323.301 million last year to $324.306 million for the corresponding six-month period this year. This represented an increase of just $1.005 million. The marginal increase in profits was as a result of the impact of Hurricane Ivan on its Grenada operations. A provision of $30 million was made against possible future losses from the banking operations in Grenada. Added to this was unrealised mark to market losses of $74 million as a result of the downgrading of the sovereign credit rating of Grenada by international rating agencies. This resulted in a total provision of $104 million.

Had it not been for the unforeseeable circumstances in Grenada, profit attributable to shareholders would have risen 21.40 percent over the comparative period in the previous year in line with RBTT’s first quarter performance. The mark to market losses mentioned above was set against other income resulting in an almost negligible increase in Total Net Income from the prior period.  It is however worthwhile to note that despite the falling interest rate environment over the comparative six-month period, Net interest income showed a commendable increase from $715.524 million to $773.705 million (8.13 percent). Operating profit rose by 1.08 percent from $366.855 million to $370.801 million as non-interest expenses fell 0.48 percent from $813.846 million to $809.913 million. The non-interest expense included the provision for future losses from the operations in Grenada. 

Share of profits of associate companies and joint ventures also decreased 42.41 percent to $12.721 million from $22.089 million a difference of $9.368 million. Profit before taxation decrea-sed 1.39 percent to $383.522 million, taxation increased 5.26 per cent to 65.277 million and profit after taxation dropped 2.66 percent to $318.245 million. The company posted and earnings per share of 95 cents for the half year which is exactly the same as the corresponding period in 2003. Despite this, the Group’s Management is of the view that its strong capital base and diversified earnings stream will allow the Group to recover from these unforeseen circumstances and be able to increase operating profits over the remaining two quarters of this fiscal year.

As a result of the provisions already made WISE is revising its year end expected earnings per share down from $2.82 to $2.55. The Group’s balance sheet continues to reflect solid growth with assets increasing by 6.1 per cent over the six-month period (loans accounted for 70 percent of this growth).  Shareholders’ Equity also grew by 5.9 per cent. In addition, the Board of Directors has declared an interim dividend of 41 cents per share to be paid on November 29, 2004. At the current share price of $42.50 RBTT Financial Holdings Limited is trading at a running price to earnings multiple of 17.49. Using a forecasted EPS of $2.55 the projected price to earning multiple is 16.67. RBTT will begin trading ex-dividend from Tuesday.