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MTL
MTL
MTL - Mercantile - Trading Statement And Moody`s Rating
Mercantile Bank Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1989/000164/06)
Share code: MTL ISIN: ZAE000064721
("Mercantile" or "the company")
TRADING STATEMENT AND MOODY`S RATING
This trading statement is issued in compliance with paragraph 3.4(b) of the
Listings Requirements of the JSE Limited.
The earnings and headline earnings for the year ended 31 December 2008 are
expected to improve by 130% to 150% compared to the earnings and headline
earnings per share reported for the year ended 31 December 2007. This
improvement is largely due to the ongoing growth in core business and the
raising of a deferred taxation asset at year end by the main subsidiary of the
Group, Mercantile Bank Limited (`the Bank") which will result in a credit to the
income statement of approximately R125 million to R145 million. Excluding the
impact of recognising the deferred taxation, the earnings and headline earnings
for the year ended 31 December 2008 are expected to improve by 45% to 65%
compared to the earnings and headline earnings per share reported for the year
ended 31 December 2007.
An update on the replacement of the core retail banking systems and
enhancement/upgrade of current systems architecture was included in the
announcement of our 30 June 2008 interim results on SENS on 24 July 2008. As
stated in that announcement, the overall spend on the project was expected to
increase from the estimated cost of R149 million, due to additional work that
would be undertaken in changes to processes (mapping still underway), increased
scope and/or functionality sought, a consequential increase in resources
required and any additional unforeseen impact of integration of systems as well
as currency fluctuations. Greater certainty around these costs will emerge over
the next months as the process-mapping phase of the project is concluded and
details of the anticipated increased costs will be reported on with the release
of our 31 December 2008 results.
Moody`s Investor Service completed their annual review of the Bank and have
reaffirmed their national scale issuer ratings in August 2008 as follows:
Short term P-1.za
Long term A2.za
Outlook Stable
On 27 August 2008, Standard & Poor`s raised the long term rating of the
Company`s parent, Caixa Geral de Depositos ("CGD"), from A+ to AA-, and its
short term rating from A-1 to A-1+. After this revision by Standard & Poor`s the
ratings awarded to CGD by the three international rating agencies are as
follows:
Short term Long term Date
Fitch Ratings F1+ AA- September
2007
Moody`s Prime -1 Aa1 July 2008
Standard & A-1+ AA- August 2008
Poor`s
Outlook Stable
The financial information on which this trading statement is based has not been
reviewed or reported on by the company`s auditors.
The results for the year ending 31 December 2008 are expected to be published
towards the end of February 2009.
Johannesburg
31 October 2008
Sponsor: Bridge Capital Advisors (Pty) Limited
Date: 31/10/2008 12:25:14 Produced by the JSE SENS Department.
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