Trinidad and Tobago, home to four large commercial banks and four smaller institutions, boasts a competitive financial sector. But size and stability give Republic Bank an edge not just over its domestic rivals but over most other Caribbean markets as well.
The bank has the largest market share in terms of deposits and loans, and in an environment of excess liquidity and low interest rates profited from increases in credit demand.
Assets at the bank have risen to about $47 billion, from approximately $46 billion in 2010, and net profit after taxes of $1.2 billion is up from approximately $1.1 billion in 2010. Its return on average assets climbed to 2.51% from 2.43% while its return on average equity stands at 16.0%, compared to 15.3% in 2010.
Growth has come from its real estate and vehicle market lending as well as credit card-related technology developments. Banks able to improve their informational systems and curb operational costs can make up for revenues from private operations, says Moody¹s analyst Alexandre Albuquerque a fact that¹s also positive for margins.
Mortgage lending continues to thrive, he says , and is the only market segment where the outlook remains solid. The credit system grew 3.1% nationally to March, driven by the real estate market, which went up by 9.8% first quarter. Business lending, by contrast, was 5.7% in June, and was down to 5.1% in July.
But compared to historical standards, overall credit growth is weak, at 2.9% in August on an annual basis. This has led banks to remain conservative in terms of their approach to new and existing business.
³Most of the concern over the economy is due to the fact that prices in the energy sector are still going down,² says Albuquerque. Trinidad and Tobago is seeking to expand its oil and gas output to take advantage of strong demand for gas in South America, Europe and Asia.
Albuquerque predicts GDP growth forecasts ranging from 0.9% to 1.2% for the year ahead following a 1.4% contraction in 2011. But he says that on the positive side, banks are well capitalized, have quality assets and so are cushioned against the worst effects of potential losses. LF