Marguerite Chambers, Contributor
( L - R ) CHAMBERS and BRADY
FIRSTCARIBBEAN INTERNATIONAL Bank (FCIB) started the first quarter of FY 2006 earning a net interest income of US$84.3 million for the quarter ended January 31, 2006, up 8.6 per cent on US$77.7 million recorded in the prior year.
Operating income reached US$37 million as opposed to US$149 million earned in the comparable quarter. This was largely due to the one-off US$117.4 million gain on the sale of the Bank's shareholdings in Republic Bank reported in the first quarter of 2005. When normalised, operating income was 17 per cent above the matching quarter. The group attributed this growth to the strong performances in capital market transactions and returns from the outsourced investment portfolios.
For the quarter FCIB's operating expenses reached US$68.9 million - approximately one per cent below that spent in the comparative period. This prompted an improvement in the group's efficiency ratio from 63.8 per cent to 56.9 per cent, reflecting the group's continued efforts to manage its growth in an effective and efficient manner.
NET INCOME
After taxes and minority interests were considered, FCIB earned US$43 million in net income for the three months ended January 2006. This translated to US2.8 cents per share for the quarter matched against US9.8 cents per share at January 2005. As the Q1-2005 results were significantly impacted by the exceptional gain of US$117.4 million, when such gains are excluded, the net income for the frst quarter (Q1) of 2006 proved to be 35 per cent higher than the prior year's quarter.
The FCIB Group has made considerable strides in its ability to integrate, consolidate and harmonise synergies after the merger of CIBC and Barclays. Although faced with internal and external challenges, the Group experienced significant growth in its earning assets with a 27 per cent year over year improvement inclusive of a five per cent portfolio hike for the first quarter.
With the addition of Curaçao to the Group, FCIB has re-branded its international banking segment to create FirstCaribbean International Wealth Management. The newly acquired international banking and asset management business in Curaçao will boost the FCIB balance sheet with around US$1 billion in assets and more than US$600 million in assets-under-administration. The intention is to nurture a closer personal management relationship with its entire client base through value-added products and services. The expansion of the branch network and ATM system in Jamaica, as well as the successful introduction of FCIB to the Trinidad and Tobago market in 2005, also promise new opportunities for the FCIB Group.
In keeping with the Bank's five-year integration strategy, all three initiatives should 'take back' market share from regional competitors while boosting loan growth in order to improve earning assets. Being highly liquid with a cash position of about US$2.4 billion, FCIB has ample room to grow its volume of earning assets and consequently profits for years to come.
Even with infrequent trades on the Jamaica Stock Exchange, FCIB stock has shown fairly steady price appreciation yielding 2.5 per cent for the 12 month-to-date in a local market presently characterised by declining stock prices. In fact, coupled with FCIB's regional performance and expansionary acquisitive drive, this stock makes an attractive long-term investment option.
RECOMMENDATIONS
We hold favourable long-term outlook for NCBJ, First Jamaica Investment, DB&G, and BNSJ. Lascelles, JBG, and Seprod could also perform well. For further information on these and other stocks, contact us at 1-888-CALL DBG or visit www.mydbg.com and click our stockbrokerage division for detailed analyses.
Disclaimer: All information contained in this article has been obtained from sources that DB&G believes to be accurate and reliable. All opinions and estimates constitute the Author's judgment as of the date of the article. No warranty as to the accuracy, timeliness or completeness of this article and as to the opinions based thereon is given or made by DB&G. DB&G and/or its employees or directors and/or any associated person may have an interest in, or interest in the acquisition or disposal of, the securities or class of securities mentioned herein. Call 1-888- CALL DBG if in doubt about the content of this article. Decisions based on information contained in this article are your sole responsibility.
