By Dennise Williams, Staff ReporterFIRSTCARIBBEAN INTERNATIONAl Bank has reported a 5.16 per cent drop in net profits for the financial period ending October 31, 2003. However, using their net income per common share in cents reveals cash earnings increasing by 57 per cent.
Company results published December 21st reveals that net income was BBD$211.6 million or J$6.4 billion, down from the pro forma 12-month fiscal 2002 net income of BBD$223.2 million or J$6.7 billion. According to published financial statements, the company had some rough patches but in terms of containing their expenses, they have improved over the previous year. States the company, "net interest income has declined by BBD$26.2 million (J$790.2 million) or 5 per cent versus the prior year, a result attributable to a fall in US interest rates and a decline in loans. Non-interest expenses have been reduced by BBD$5.3 million (J$159.8 million) this year, an excellent result driven by the aggressive realisation of synergies and ongoing cost control."
Total loans fell by 4.4 per cent to BBD$ 7.1 billion (J$214.8 billion) from BBD$7.4 billion (J$224.8 billion) in 2002. Total deposits fell by 3.97 per cent from BBD$15.1 billion (J$ 456.6 billion) in 2002 to BBD$14.5 billion (J$437 billion) in 2003.
On the upside, total assets increased by a marginal 0.06 per cent from BBD$17 billion (J$513.5 billion) in 2002 to BBD$17.12 billion (J$516.4 billion) in 2003. But these figures are a bit deceptive. States the company, "one of the consequences of the reverse accounting treatment of last year's combination is that the 2002 comparative financials, as presented, do not provide an accurate picture for year over year comparison of performance."
So, according to managing director of JMMB Securities, Leo Williams, investors should not be fooled by the slightly lower figures as this was due to the exceptional activity of the merger of CIBC and Barclay Bank. States Mr. Williams, "if you look at the earning per share figure it looks like its down, but the real figure that investors should look at are the net income per common share in cents."
Earnings per share as at October 31, 2003 is BBD$0.137 (J$4.132) a .08 per cent drop from 2002 figures of BBD$0.149 (J$4.494). However, following Mr. Williams's advice, the net income per common share in cents reveals more impressive figures.
Mr. Williams believes that investors would not do badly investing in this company. Using the net income and shareholders equity figures presented, the return on equity that investors would achieve would be approximately 10 per cent.
PURCHASING POWER
"This stock would suit investors who want the exposure the bank has to 15 Caribbean countries. Additionally, this bank has the purchasing power of Barclays and its ability to bring new retail banking products to the Caribbean."
Currently, the stock trades at J$80.00 on the JSE. On the Trinidad and Tobago Stock Exchange, FirstCaribbean International trades at around TT$8 (J$77.04) while on the Barbados Stock Exchange, it trades at BBD$2.65 (J$79.50). Which, according to Mr. Williams, signifies that the stock is "trading at full value relative to the other markets." He states that the future level of success that this bank will have is totally dependent upon how successfully the banks integrates itself into the Caribbean and this includes marketing, technology, infrastructure and its back office operations. FirstCaribbean International Bank is the result of the merger in 2002 of CIBC and Barclays Bank. The bank has a staff complement of 3,000 employees at 80 branches across the Caribbean.
