For the six months to April 2015, SBTT delivered revenues of $702.2 million and an after-tax profit of $259.6 million. Total revenues expanded by 7.9 per cent, moving from the previous year's tally of $651.1 million. The net interest income component rose by 4.9 per cent, advancing to $460 million from $438.8 million. The other income element grew by 14 per cent to $242.2 million from the last period's $212.3 million.
This higher growth rate in non-interest income is becoming more prevalent at many financial institutions, as they develop their fee, commission and other investment structures. In SBTT's case, insurance services is proving to be an increasingly reliable stream of income and profit.
Non-interest expense rose by 5.7 per cent, moving from $310.7 million to $328.5 million.
Reflecting its adjustment to a higher level of economic uncertainty, the bank increased its loan loss expense provision to $25.2 million in the current period; this shows a more than 100 per cent increase from the $11 million allocated in the 2014 period.
These changes saw SBTT deliver a pre-tax result of $348.5 million, which reflects a 5.8 per cent improvement over the comparative 2014 figure of $329.5 million.
The effective tax take increased from 24.2 per cent in 2014 to 25.5 per cent in the current period. This change limited the growth in after-tax profit to 3.9 per cent, as it improved to $259.6 million from $249.7 million.
Changes in financial position
Total assets rose from $20.7 billion as at its October 2014 year-end to $21.4 billion last April, reflecting an increase of 3.6 per cent.
The two most significant advances were recorded under net loans to customers and investment securities. The former rose to $12.7 billion from $11.8 billion, reflecting a 7.7 per cent increase.
In the case of the latter, this component expanded robustly by 42 per cent to $2.2 billion from the October 2014 level of $1.57 billion.
During the second quarter SBTT settled its outstanding bond, thus removing $618 million from its liabilities. Also, as its insurance business continues to grow, policyholders' funds rose from $797.5 million to $992.3 million, reflecting a 24.4 per cent gain. Amounts due to banks and related companies rose to $83.8 million from $40 million.
These were the major changes that resulted in total liabilities increasing by only 4 per cent to $17.84 billion from $17.15 billion.
Equity gains
Stockholders' equity ended at $3.58 billion from the 2014 year-end figure of $3.53 billion.
The retained earnings balance increased by only $11 million to end at $2.66 billion. This relatively small figure was due to an allocation of $55 million being made to the statutory reserve while dividends to shareholders consumed $194 million.
Lower values on available-for-sale investment pulled down the investment valuation reserves to $17.2 million from $29.6 million previously. With 176,343,750 shares outstanding, each share has a book value of $20.29 (2014: $19.99).
Segment performance
Helped by higher lending disbursements, particularly in the second quarter, the retail, corporate and commercial banking segment delivered higher revenues and greater pre-tax profit. New variations of its insurance products allowed this division to maintain its strong advances over the half-year.
The only puzzling result was the huge contraction in both revenues and profit that occurred under the trust and merchant banking unit.
Dividends, share price and future
The interim dividend for the half-year remained unchanged at $0.80, of which $0.40 will be paid on July 10, 2015.
At its October 31, 2014 year-end, SBTT's share price was $57.98. Since then, it has moved mostly in an upward trajectory, closing at a high of $63.00 on May 15, 2015. Last Wednesday, it traded at $62.15.
As local interest rates start to increase, net interest income should again show stronger gains.
FirstCaribbean International Bank Ltd
For its half-year to April 2015, FCI posted revenues of US$257 million and generated an after- tax profit of US$52.1 million.
Total revenues fell by 2.9 per cent, moving from the previous year's US$264.4 million down to US$256.7 million. The net interest income component contracted to US$176.2 million from US$185.6 million, or by 5.08 per cent. In contrast, the other income element expanded by 2.1 per cent to US$80.5 million from US$78.8 million.
Operating expenses fell by 1.15 per cent, declining by almost US$2 million to US$172.3 million. Although loan balances were lower, their quality has improved. Consequently, loan impairment expense contracted to US$27.4 million from the previous period's US$169.5 million. Included in the 2014 period was a special allocation to loan losses of US$115 million.
In the 2014 period, there was a special allocation to goodwill of US$116 million; no such expense was incurred in 2015.
These changes allowed FCI to report a pre-tax profit of US$57 million; this compares very favourably with the loss of US$195.3 million reported for the 2014 half-year.
After allowing for taxes and non-controlling interests, the profit attributable to shareholders amounted to US$50.6 million. This result reflects EPS of US$0.032 (2014: loss of US$0.124).
Changes in financial position
Total assets rose from US$10.78 billion as at its October 2014 year-end to US$11.16 billion last April, reflecting an increase of 3.6 per cent.
Loans and advances to customers declined to US$5.97 billion from US$6.14 billion. Conversely, the total of all its cash balances climbed by 28.7 per cent; this reflected the movement from US$1.81 billion to US$2.33 billion. All its operating, investing and financing activities generated positive cash flows.
The value of investment securities rose marginally to US$2.32 billion from US$2.31 billion.
Total liabilities advanced to US$9.81 billion from US$9.44 billion.
Customer deposits and other borrowed funds rose from US$9.2 billion to US$9.46 billion. In addition, debt securities in issue climbed to US$134.5 million from US$31 million.
Equity gains
Stockholders' equity closed on April 30, 2015 at US$1.36 billion from the 2014 year-end figure of US$1.33 billion.
The retained earnings balance was boosted by the period profit of US$50.63 million and reduced by the final dividend with respect to the 2014 fiscal year of US$23.35 million.
With 1,577,094,570 shares outstanding, each share has a book value of US$0.85 (TT$5.37) (October 2014: US$0.83).
Segment performance
Even with three per cent lower revenues, and although still showing a loss, the retail banking segment exhibited the biggest swing in its results. Here, in 2014, most of the loan loss provision was allocated.
Despite a small revenue decline in the wholesale banking sector, profits recovered massively, comfortably eclipsing the loss for the 2014 period. With only a small improvement in revenues in the wealth management segment, profits surged by a robust 44 per cent.
Dividends and share price
The interim dividend for the half-year remained unchanged at US$0.015 (TT$0.095); this sum will be paid on June 26, 2015.
At its October 31, 2014 year-end, FCI's share price was TT$5.50. Since then, it has generally moved in a narrow range. Its price slipped to a low of TT$4.75 on December 31, 2014. By mid- March 2015, it recovered somewhat, trading at TT$5.10, from which point it again drifted lower.
Last Wednesday, it closed at TT$5.00.
Future prospects
With the recently announced resignation of its CEO, Rick Parkhill, the bank has entered a transitional phase during which time he will help groom the newly designated CEO, Gary Brown, to assume full operational responsibilities, effective January 1, 2016.
This new appointment coincides with the bank entering a new phase, where, having shed much of its legacy and related burdens, it can fully concentrate on making a more robust contribution to the parent company's results and to its regional and local shareholders.