Republic Bank Limited
28
ManagingDirector’sDiscussionandAnalysis
2
Executive
Introduction
For the year ended September 30, 2015, Republic Bank Limited (the Group)
recorded profit attributable to equity holders of the parent of $1.22 billion,
an increase of $30.3 million or 2.5% over the prior year. Total Group assets
increased by $6.6 billion or 11.2% to $66 billion as at September 30, 2015.
The major contributing factor to the profitability was the rise in net interest
income of $235 million or 10.6%, driven by $5.9 billion or 21.8% growth
in the loan portfolio. Loan growth continues to be robust in Trinidad and
Tobago, which was the main contributor to the growth in net interest
income. Gains on the sale of property in Guyana contributed to a 19% or
$14 million increase in profits, while growth in Barbados has stabilised after
one-off adjustments. Grenada enjoyed a $5 million increase in profitability due
to better management of interest rates, while moderate economic recovery
resulted in a decrease in loan impairment expense.
However, these positives were affected by several challenges that reduced
profitability. The carrying value of goodwill for our operations in the Cayman
Islands was reduced by $31 million due to a decline in profitability. In May
2015, we increased our shareholding in HFC Bank (Ghana) Limited (HFC) to
57.11% following the mandatory takeover bid. The overall cost of our HFC
acquisition totalled $458.8 million. Upon completion of our acquisition, and
as part of our restructuring of HFC, we recognised loan impairment expenses
of $91.2 million ($52.1 million net of minority interest).
On July 31, 2015 we acquired a 100% shareholding in RBC Royal Bank
(Suriname) N.V. (renamed Republic Bank (Suriname) N.V.) at a cost of $288.6
million.
The acquisition of HFC and Republic Bank (Suriname) N.V. added $5.5 billion
to our asset base. We expect HFC to return to profitability in 2016 after
recording a loss in 2015 which was due primarily to restructuring expenses
for its loan portfolio.
The Board of Directors has declared a final dividend of $3.10 per share for
the year ended September 30, 2015. This, when combined with the interim
dividend of $1.25 per share, brings the total dividend for the year to $4.35 per
share. At a closing share price of $112.00 per share, this equates to a dividend
yield of 3.88%.
The Bank continues to maintain a strong capital base, reflected in a total capital
adequacy ratio of 21.72%, well in excess of the 8% minimum requirement.
This excess capital places us in a good position to withstand the increased
capital requirements of the Basel II accord, which will be implemented in
Trinidad and Tobago within the upcoming year.
DavidDulal-Whiteway
