A branch of RBTT Jamaica at Tropical Plaza, Constant Spring Road, St. Andrew.- File

RBTT Financial Holdings recorded slightly depressed second quarter net profit in the period ending September 30 on higher revenues of US$126.9 million, resulting from a combined increase in operating expenses and a larger tax bill.

The group, which is finalising the combination cash and shares sale of its banking operations to Royal Bank of Canada, made net profit of US$37.7 million, a three per cent fall compared to US$39 million in the comparative quarter of 2006.

The US$2.2 billion deal, which is subject to shareholder approval, calls for RBC to acquire 100 per cent of RBTT's share capital under a scheme to combine their regional retail banking operations, creating in the process a US$14-billion banking group measured by assets.

RBTT's own balance sheet reflects assets of about US$7.9 billion.

Once finalised, the RBTT logos are expected to be replaced in some 18 countries Caribbeanwide with that of RBC's.

July says an information circular will be circulated to shareholders ahead of a special meeting scheduled for early 2008 to vote approval of the takeover.

Shareholders are being offered TT$40 per share in a combination of 60 per cent cash and 40 per cent of RBC common shares.

The stock is trading in Trinidad at TT$35 and in Jamaica at J$393 or TT$34.70. The current stock price on the Jamaica Stock Exchange reflects a retreat from a high of J$400 reached after the announcement of the RBC deal. In anticipation of the sale, the asking price for the stock is now as high as J$500.

RBTT chairman Peter July said, while, the group's retail business remained strong across all markets its trust and asset management operations "continued to under-perform", citing a depressed local market and missed targets by the group's investment bank on deals it had expected to structure.

But, even with the more than US$8 million decline in 'other income', RBTT's operating profit in its September 2007 quarter was up by 2.5 per cent to US$48.7 million.

Those earnings were further eroded, however, but by the US$11.7 million tax bill - which was US$2.2 million higher than the 2006 period - sliced away just under a quarter of bigger pretax earnings of US$49.45 million, resulting in earnings per share of 11 U.S. cents.

July said the higher tax bill resulted from a combination of "an increase in taxable income and a decline in investment income."

Revenue and profits

The company's performance over the full six-month period was more positive.

Revenues grew by more than US$20 million to US$160.9 million in the period, but net profits of US$74.2 million were basically flat, growing only by half a point.

Pretax earnings across business segments were up by 3.4 per cent to US$96 million (Q2 2006: US$92.9 million).

Geographically, Trinidad, which is RBTT's largest market and the base of its operations, continues to dominate revenues and profits. RBTT Jamaica, while showing growth in revenue and profits, contributes the least earnings to the bottomline.

Pretax earnings on its retail business grew 33 per cent across all geographic segments over the six-month period, said July, while net interest income rose 14 per cent.

RBTT is banking on more improvements in its retail operations to boost profits in the second half of its financial year ending March 2008.

business@gleanerjm.com

RBTT Financial Holdings Geographic Segments

Six-Month September 2007

Country Revenue Operating Profit

Trinidad & Tobago US$211.7m US$55.9m

EC/Barbados/Suriname US$60.56m US$15.2m

Dutch Caribbean US$77.6m US$15.1m

Jamaica US$66.7m US$8.76m