RBTT Bank posted a pre-tax profit of $1.2 billion for the 12-month period to March 31, 2004, representing an increase of 80 per cent over the previous year's profit of $673 million.
This excellent performance, the Bank says, is the result of robust growth in all areas of its operations, and continued success at cost containment.
Net operating profit before taxes has increased 185 per cent in just two years, moving from $420 million in the year ended March 31, 2002 to $1.2 billion in the current 12-month period to March 31, 2004.
The Managing Director, Mr. Amrit Sinanan, attributes the Bank's strong performance to "aggressive business development activities, effective Treasury management, operating efficiencies, our commitment to quality service and prudent management of expenses. Our financial performance and our increase in market share and customer base over the past two years have been tremendous". This is clearly seen in the strong growth in loans and advances which amounted to just $1.2 billion when RBTT commenced operations in March 2001. Today, this figure stands at $16.7 billion including Reverse Repos, and income from loans now makes a major contribution to RBTT's dynamic performance.
LOAN LOSS
Critically, only $10.7 million was actually written off in relation to loan loss in comparison to $47.7 million in the previous year, despite the significant increase in RBTT's loan balance. At Balance Sheet date the portfolio of non-performing loans was $171.1 million, or just 1 per cent of the total portfolio. Interest on Government securities continues to be a significant contributor to earnings. However, as Mr. Sinanan points out RBTT is steadily converting these investments into productive loans. As a result, the Bank's holdings of Government paper decreased from $19.7 billion to $15.6 billion.
During the period under review, RBTT also earned $651 million from loan fees, foreign exchange trading and other services, up from $532 million the previous year. Interest costs increased by $542 million in line with the growth of the Bank's funding base which increased by $1.3 billion, and the generally higher market interest rates that prevailed during most of the period.
Operating expenses rose by $956 million with staff costs accounting for $470 million of the increase. Mr. Sinanan explains that this underlines the Bank's commitment to harmonisation of its salary structure including staff benefits. In addition, significant investment was made in training and development programmes geared towards strengthening the organisation's service and sales culture.
Financial assistance has been extended to all sectors of the Jamaican economy including
manufacturing, tourism, transportation, utilities, real estate development, importers and the distributive trades, among others. Corporate and other business loans increased from $4.9 billion to $8.3 billion during the past year while personal loans grew by $1 billion to $2.7 billion. "All loan targets have been exceeded", states Mr. Sinanan in a statement accompanying the recently released financial results, citing several niche loan products that have been introduced over the past two years that cater to specific market segments including medical doctors, teachers and members of the police force.
NEW PRODUCTS
In addition, a number of new deposit products were introduced, including the Jackpot Savings, Moneymax, and the Partner Plan was re-launched in May 2003. Two major campaigns, the three-month "Save at RBTT Now" deposit campaign and the Christmas loan campaign contributed significantly to growth in the core banking business. The Card business also performed well, with over 13,700 debit cards issued during the year.
SHAREHOLDER EQUITY
The net profit translated to a 20.7% return on average shareholders equity, up from 11.4% a year ago. At the same time RBTT has succeeded in significantly reducing a Retained Earnings deficit of $2.7 billion inherited with the purchase of the Bank in 2001. This figure currently stands at a negative $321 million.
KEEPING PROFITS IN JAMAICA
Mr. Sinanan added that these accomplishments are commendable and indicated that RBTT's direction, guided by the core corporate values and enhanced by the commitment of the staff, was in keeping with the Group's objectives for growth and development of RBTT in the region. He noted that from inception, RBTT has retained all profits in Jamaica and no dividends have been paid to the parent company.
With total assets of $40.5 billion, and shareholders equity of $6.3 billion, the Bank has significant room for further leveraging. This process has already started, with the scheduled opening of a new branch in Portmore in June 2004. Other locations are being explored and plans are afoot to refurbish and expand a number of its existing branches. The Bank is also consolidating its Tower and Harbour Street Branches into new, enhanced premises on Duke Street. There was also a thrust to increase its share of the ATM market through the installation of additional ATMs islandwide. New machines were installed in May Pen, Norman Manley Airport, Sangster International Airport, Montego Bay and Port Maria.
BRANCHES AND ATMS
The ATMs at Liguanea and Up Park Camp were upgraded to ensure more efficient and reliable service through their increased capacity to service a greater number of transactions. There was marked focus in the area of management development. Three management trainees were appointed as Branch Managers and a second group has already commenced training.
Since acquiring the former Union Bank in 2001, RBTT has made significant inroads into the Jamaican financial services market, in the process acquiring a reputation as an innovative Bank.
This culture of innovation and quality, customer-friendly service has reaped rich rewards, as evidenced by the sharp growth in the Bank's core business over the past three years. Its Corporate Banking Centre caters to the larger corporate customers, while the Bank markets its products and services to business and personal clients through a network of 23 branches.
INNOVATIVE
BANKING SOLUTIONS
"RBTT is owned and managed entirely by Caribbean people, confirming our view that regional professionals can stand up against the best anywhere in the world," declared Mr. Sinanan. "We intend to continue our focus on providing innovative banking solutions to Jamaica through continuous improvement in our customer service processes, investment in our human resources, assertive marketing and product development as well as continued effectiveness in treasury and cost management".
"In addition, plans are in place to upgrade operating technologies to enable a common platform within the RBTT Group. This will facilitate the improvement of our management information system and allow our customers to take advantage of the synergies of the Group's network in 12 regional jurisdictions," added Mr. Sinanan.
"In the face of a very challenging year, RBTT has produced excellent results with a net profit of $1.2 billion for the period under review. Barring any unforeseen developments, we expect to have continued growth and contribution to those we serve in Jamaica and the region as a whole", concluded Mr. Sinanan.
PROFITABLE
In March 2001, RBTT (Ja) branch network made a negative contribution to profits. Fast forward to March 2004, 21 of the 23 branches are now profitable. RBTT insight
An insight into what makes RBTT's banking methods remarkable is its approach to the conversion of FINSAC bonds into Local Registered Stock (LRS). In March 2001 $23 billion was converted to LRS. Rather than holding them as an investment (Government paper) as most Jamaican banks are prone to do, today they have been converted to $12 billion of high quality loans.
The Financial Gleaner understands that RBTT, operating in 12 countries is to purchase Caribbean Commercial Bank based in Barbados.
