SBTT Improves, CIBC Declines | 24.03.2025

HIGHLIGHTS

SBTT Q12025

  • Earnings:  Earnings Per Share 1.3% higher, from $0.93 to $0.94
  • Performance Drivers:
    • Modest Revenue Growth
    • Higher Non-Interest Expenses
  • Outlook:
    • Increased Economic Activity
  • Rating: Maintained at MARKETWEIGHT

CIBC Q12025

  • Rating: Maintained at MARKETWEIGHT

This week we at Bourse review the performance of locally listed Canadian banking giants, CIBC Caribbean Bank Limited (CIBC) and Scotiabank Trinidad and Tobago Limited (SBTT) for their respective three-months reporting periods ended January 31st, 2025 (Q12025). SBTT’s performance was supported by modest revenue growth, while CIBC was impacted by higher provision for credit losses. We discuss below.

Scotiabank Trinidad and Tobago Limited (SBTT)

Scotiabank Trinidad and Tobago Limited (SBTT) reported Earnings per Share (EPS) of $0.944 for the three-month period ending January 31st, 2025, an increase of 1.3% compared to $0.932 in the prior period.

Net Interest Income advanced 10.4% from $346.4M in Q12024 to $382.5M in Q12025. Other Income contracted 17.4% to $111.3M from the prior year quarter of $134.8M. Resultantly, Total Revenue grew modestly by 2.6%, to $493.8M from a prior $481.2M. Non-Interest Expenses increased by 2.2%, from $200.0M in Q12024 to $204.4M in Q12025. SBTT’s Net Impairment loss on financial assets improved by 11.1% year on year to $33.8M in Q12025. Profit before Taxation rose to $255.6M, up 1.9% compared to the prior period. Taxation Expense grew 3.0% year on year to $89.0M. Overall, Net Profit attributable to Equity holders amounted to $166.5M, up 1.4% relative to $164.3M reported in Q12024.

Improved Revenues

Net Interest Income, the Group’s largest revenue contributor (Q12025: 77.5%) rose by 10.4% year on year to $382M, driven by higher loan volumes on retail and commercial portfolios.

Other Income (22.5% of Total Revenue) declined 17.4% from $135M to $111M in Q12025, reportedly driven by a decrease in trading revenues which was partially offset by growth in the insurance and wealth revenue streams.

SBTT’s efficiency ratio remained relatively stable moving from 41.6% in Q12024 to 41.4% in Q12025. Non-interest expenses rose by $4.4M to $204.4M in Q12025, reflecting both inflationary pressures and higher business activity levels. With modest revenue growth expected, maintaining effective cost control will be essential in determining future profitability.

Total assets grow

SBTT’s Total Assets rose 3.6% year-on-year, increasing from $30.1B in Q12024 to $31.2B in Q12025. Total Loans (68.2% of Total Assets) advanced 7.0% from $19.9B to $21.3B in Q12025, reflecting consistent growth across the past five (5) year reporting periods. The Investment portfolio (Securities and Treasury Bills) totalled $6.5B, a 7.4% increase compared to the prior period, as the Group strategically deployed excess liquidity into investments.

The Bourse View

SBTT is currently priced at $55.05 and trades at a P/E ratio of 14.7 times, above the Banking Sector average of 10.0 times.  SBTT declared an interim dividend of $0.70 per share payable on April 11th, 2025, to shareholders on record by March 21st, 2025. The stock offers a dividend yield of 5.1%, above the sector average of 4.8%.

The Group’s strong commitment to dividend payments is evident in its dividend payout ratio of 75% reinforcing its attractiveness for income-oriented investors. On the basis of modest revenue growth, tempered by elevated valuations, Bourse maintains a MARKETWEIGHT rating on SBTT.

CIBC Caribbean Bank Limited (CIBC)

CIBC Caribbean Bank Limited (CIBC), reported Earnings Per Share of TT$0.24 for the three-month period ended January 31st, 2025 (Q12025), 32.1% lower compared to TT$0.35 recorded in Q12024.

Total Revenue grew 1.3%, from TT$1.23B in Q12024 to TT$1.24B in Q12025. Operating Expenses increased 7.1% to stand at TT$747.4M, due to employee-related costs. CIBC reported a Credit Loss Expense on Financial Assets amounting to an expense of TT$73.0M in Q12025 versus a release of TT$85.1M in the prior period, attributable to a non-recurring recovery in the Bahamas in the prior year. Income Before Tax (PBT) stood at TT$423.0M, 31.2% lower than TT$614.3M in Q12024. Consequently, CIBC recorded an Income Tax Expense of TT$35.3M (7.5% reduction). Overall, the Group reported Net Income Attributable to Equity Holders of TT$363.0M, down 34.2% from a prior TT$551.8M.

Revenue Stable

CIBC’s Total Revenue increased by 1.3%, reaching TT$1.24B in Q1 2025. The bank attributed the growth primarily to higher loan volumes, offsetting the impact of narrowing interest margins from falling US benchmark rates. Net Interest Income, the Group’s largest revenue contributor (Q12025: 72.5%) expanded 2.0% TT$901M. The Group’s loan portfolio gained 7.6% YoY to TT$48.4B in Q12025. Operating Income accounted for 27.5% of Total Revenue and had a marginal decline of 0.4% to TT$342M.

PBT Declines

CIBC’s Profit Before Tax (PBT) amounted to TT$423M in Q12025 relative to TT$614M in Q12023, dropping 31.2% Year on Year (YoY). CIBC’s Corporate and Investment Banking (CIB) segment accounted for 68.5% of PBT with a reported TT$290M in Q12025, falling 40.1% YoY. Personal & Business Banking (PBB) recorded a PBT of TT$145M in Q12025 advancing 57.5% compared to TT$92M in the prior comparable period.  Wealth Management recorded a decrease in PBT from TT$17M to TT$10M, down 39.2% in Q12025.

Divestitures

On February 7th, 2025, the Bank finalized the sale of its banking assets in St. Maarten to Orco Bank N.V., marking the end of its previously disclosed divestitures in the Dutch Caribbean.

The Bourse View

CIBC currently trades at a price of $8.13 at a trailing P/E ratio of 7.8 times, below the Banking Sector average of 10.0 times. The stock offers investors a trailing dividend yield of 4.2%, below the sector average of 4.8%. The Group announced an interim dividend of US$0.0125 (TT$0.08) per share payable to shareholders on April 24th, 2025, on record as of March 28th, 2025.

In addition to declining US benchmark rates, CIBC faced higher operating expenses compared to the previous year, largely due to increased employee-related costs linked to the protection of the Bank’s divestiture. On the basis of modest revenue growth, USD dividends, tempered by higher expenses Bourse maintains a MARKETWEIGHT rating on CIBC.

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