Republic Bank has recorded an annual profit of $1.1 billion for the financial year ended September 30, 2011.
That’s a 12.8 percent increase over last year of profit attributable to shareholders from the bank’s holdings here in Trinidad and Tobago, as well as subsidiaries in Barbados, Grenada, Guyana and the Cayman Islands.
In the midst of continued sluggish activity on the local market and the debt crisis facing the United States and some European countries, Republic Bank’s managing director David Dulal-Whiteway credited the bank’s year-on-year increase in profits (2010 to 2011) to recovery of bad loans and an increase in loan demands.
“We had a good recovery of previously written off loans this year; approximately TT $180 million worth, which would have pushed up our income. In addition, there has been a slight growth in our loan portfolio. Although it is less than one percent, it is an improvement over the previous two years, 2008 to 2010, when we saw a reduction in loan demands,” Dulal-Whiteway said.
Questioned about the impact of excess liquidity on Republic Bank’s profits, Dulal-Whiteway explained that “excess liquidity actually goes onto our balance sheets as assets. Most of that money is invested in Treasury Bills or deposited as cash in the Central Bank. Liquid assets tend to generate the lowest yields, which is why banks prefer to have a higher loan to deposits ratio. Two or three years ago our loans to deposit ration was approximately 80 percent but today it is in the mid-60s.”
Looking ahead, Dulal-Whiteway expressed hope Republic Bank will maintain its level of profit in 2012, even though economic activity in the region is expected to be largely stagnant.
“Next year’s results should be at least as good as this year’s mainly due earnings from Trinidad and Tobago, where we hope to see growth based on initiatives mentioned in the 2011 – 2012 budget. However, we expect to see more mixed results from our regional subsidiaries, whose economies are mostly tourism-dependent. Take Barbados for example, where the number of tourists has increased but visitors are spending less,” Dulal-Whiteway said.
The managing director’s view on the economic outlook for Republic Bank in 2012 were similar to those of his chairman, Ronald Harford, who issued a statement about the $1.1 billion profit on Wednesday.
“The outlook for 2012 is one of flat performances across the region, except for resource-endowed countries like Guyana and Trinidad and Tobago, where better growth rates are expected. We remain hopeful that Government’s recent 2011 – 2012 budget presentation, which focussed on job creation, spurring investment and national security, will contribute to an improved economic environment,” Harford said.
Shareholders will get a final dividend of $2.75, it was $2.40 in 2010, which will be paid on December 2. A half year dividend of $1.25 was paid on May 27, 2011, making a total dividend on each share of $4.00, up $0.45 from 2010. The dividend yield based on the current share price is 4.3 percent.
Noting Republic Bank’s dividend yield is over 40 percent versus the average Fixed Deposit Rate of 0.5 percent, Dulal-Whiteway said “I encourage people to take money from fixed deposits and buy shares instead.”
On the issue of Government’s plan to list Republic Bank shares on the TT Stock Exchange via a company to be called National Enterprises Limited Two (NEL 2), Dulal-Whiteway said “work is being done on the legislative framework for NEL 2 but I am unaware of the stage it is at.”
