| Thu 19 Feb 2009, 8:00 | | IBLP - Imperial Bank - Audited financial results for the year ended |
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IBLP - Imperial Bank - Audited financial results for the year ended
31 December 2008 and dividend declaration
Imperial Bank Limited
(Incorporated in the Republic of South Africa)
(Registration number 1995/012641/06)
Preference share code: IBLP & ISIN: ZAE000081675
("Imperial Bank" or "the company")
IMPERIAL BANK
AUDITED FINANCIAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2008
OVERVIEW
Imperial Bank Limited (Imperial Bank or the Bank), was incorporated in 1996 and
is primarily engaged in asset-based financing. Nedbank Limited (Nedbank) and
Imperial Holdings Limited (Imperial Holdings) respectively hold 50.1% and 49.9%
of the ordinary share capital. In terms of a Memorandum of Understanding signed
by the shareholders in 2001, Nedbank provides the funding for the Bank, as well
as risk management support and Imperial Holdings provides the Bank with access
to its extensive South African footprint. A new shareholders` agreement has
been concluded by Nedbank and Imperial Holdings which will come into effect on
1 January 2011 when the current agreement ends. The new agreement is for an
indefinite period.
The Bank has four operating divisions. Motor Finance is the largest division
comprising 62.7% of group loans and advances, followed by Property Finance with
17.9%, Professional Finance (formerly Medical Finance) with 11.1% and Supplier
Asset Finance with 8.3%.
These financial results are published to provide information to the holders of
Imperial Bank`s listed non-redeemable, non-participating, non-cumulative
preference shares.
REVIEW OF THE YEAR
2008 has been an extremely challenging year characterised by high interest
rates, high food, electricity and oil prices and in the final quarter this was
combined with a rapidly deteriorating world economy and slowing domestic
economy. Under these circumstances, the Bank produced a net profit after tax of
R361.2 million, down 24.6% from the R479.2 million in the previous year. Return
on equity declined from 23.9% to 13.2%, however the efficiency ratio improved
from 30.2% to 28.8%. Loans and advances grew from R35.3 billion to R44.7
billion as the Bank continued to attract good quality new business.
Motor Finance had a testing year. Although loans and advances grew 29.0% from
R21.7 billion to R28.0 billion, impairment losses on loans and advances
increased 63.7% and represent 2.5% of average gross loans and advances compared
to 1.9% in the previous year. The Board confirmed through an in-depth
independent analysis that the Motor Finance business model remains sound in a
tough market, evidenced by the efficiency ratio improving from 29.5% to 27.3%
in the current year. Net profit after tax declined 35.0% from R206.8 million
to R134.5 million. Motor Finance strengthened its position in its market.
Property Finance achieved good results, benefiting from a pipeline of business
approved in the latter half of 2007. In line with the current strategy, the
commercial and industrial mortgage book grew 50.0% from R3.8 billion to R5.7
billion. Net profit after tax decreased 11.2% from R170.5 million to R151.4
million.
Supplier Asset Finance disposed of the debt collection business and
repositioned itself to take advantage of financing equipment. Loans and
advances growth of 37.0% and net profit after tax of R32.1 million were in line
with forecasts.
Medical Finance, which changed its name to Professional Finance, had a
disappointing year. Impairment losses on loans and advances increased from
R3.8 million to R26.7 million while margins remained under pressure and the
efficiency ratio was well above target. During the last quarter, the division
commenced a restructuring initiative which should improve the efficiency ratio
and restore margins to levels required to achieve an acceptable return. Net
profit after tax declined 33.2% from R19.6 million to R13.1 million.
The effective tax rate has increased from 30.0% to 33.5% due to a change in the
estimated liability for deferred tax in a subsidiary company.
No material events have occurred subsequent to 31 December 2008 which may have
an impact on the group`s reported financial position at this date.
PROSPECTS
Recent months saw a dramatic change in the world economy. The speed and
severity of the decline is unprecedented and has inevitably had a severe impact
on the South African economy. Although interest rates are anticipated to
decline through the year, bringing welcome relief to hard-pressed consumers, it
is possible that the effects of retrenchments will overshadow the benefits of
lower interest rates. Accordingly, trading conditions are likely to remain
difficult and unpredictable.
Motor Finance will focus on managing the growth of the book within the
constraints of the market, while ensuring that risk-based pricing is further
enhanced.
Property Finance will continue to focus on growing the book of commercial and
industrial loans and advances while selectively servicing the residential
development market. Demand for property finance has significantly reduced and
is unlikely to be restored during 2009.
Professional Finance will focus on improving margins and efficiencies and on
maintaining a good quality book, while expanding the market footprint to include
other professions.
Supplier Asset Finance will focus on increasing its presence in the financing
of equipment and assets related to infrastructural spend while continuing to
serve its traditional office equipment, trucking and aviation markets.
CAPITAL MANAGEMENT
During the year, the Bank successfully implemented the requirements of Basel
II, adopting the standardised approach for both credit and operating risk. As
part of this process the Bank reviewed its capital position, as well as its
targeted capital adequacy. The Bank intends to increase the capital adequacy
ratio from the current 11.1% to 12.0% and thereafter to maintain capital
adequacy within a range of 12.0% to 12.5%. The IPB1 Imperial Bank Tier II bond
was redeemed on 4 December 2008 at its callable date. A new Tier II bond, IPB3,
with a nominal value of R300 million was listed on BESA on the redemption of
IPB1. In addition, the shareholders contributed R450 million of ordinary equity
capital on 4 December 2008 in order to support the Bank`s continued growth and
to progress towards the capital adequacy target range.
CHANGES TO BOARD OF DIRECTORS
During the reporting period the following changes were made to the Imperial
Bank board:
- Mr M A Enus-Brey resigned on 31 January 2008.
- Mr P K Ward was appointed as an independent non-executive director on 14
August 2008.
ACCOUNTING POLICIES
The accounting policies applied for the year are consistent with those of the
prior year. The group financial results, from which these condensed financial
statements were derived, are prepared in accordance with International
Financial Reporting Standards and have been prepared on a historical cost basis
except for the fair value of certain financial instruments. These condensed
financial statements have been prepared in terms of IAS 34: Interim Financial
Reporting.
IMPERIAL BANK NON-REDEEMABLE, NON-PARTICIPATING, NON-CUMULATIVE PREFERENCE
SHARES - DECLARATION OF DIVIDEND NO. 5
Notice is hereby given that preference dividend No. 5 of 545.32877 cents per
share has been declared for the period from 1 July 2008 to 31 December 2008,
payable on Monday, 16 March 2009, to shareholders of the non-redeemable,
non-participating, non-cumulative preference shares recorded in the books of
the company at the close of business on Friday, 13 March 2009.
In accordance with the provisions of STRATE, the electronic settlement and
custody system used by the JSE Limited, the relevant dates for the payment of
the dividend are as follows:
Last day to trade cum dividend Friday, 6 March 2009
Shares trade ex dividend Monday, 9 March 2009
Record date Friday, 13 March 2009
Payment date Monday, 16 March 2009
Share certificates may not be dematerialised or rematerialised between Monday,
9 March 2009 and Friday, 13 March 2009, both days inclusive.
Where applicable, dividends in respect of certificated shares will be
transferred electronically to shareholders` bank accounts on payment date. In
the absence of specific mandates, dividend cheques will be posted to
shareholders. Shareholders who have dematerialised their share certificates
will have their accounts, at their CSDP or broker, credited on Monday, 16 March
2009.
For and on behalf of the Board
H R Brody R van Wyk
Chairman Chief Executive Officer 18 February 2009
KEY RATIOS
At Audited Audited
December December
2008 2007
Net interest income to average interest-earning
banking assets % 4.2 4.6
Impairment losses on loans and advances
as a percentage of average gross loans and
advances % 1.7 1.3
Non-interest revenue as a percentage of
operating income % 7.8 10.6
Efficiency ratio % 28.8 30.2
Return on ordinary shareholders` equity % 13.2 23.9
Return on total average assets % 0.8 1.4
Capital adequacy
- Tier 1 % 8.5 6.9
- Total % 11.1 10.6
SHARE STATISTICS
Number of shares in issue
- Ordinary shares m 393.7 340.0
- Preference shares m 3.0 3.0
Preference share traded price (closing) R 72.4 89.0
Net asset value per ordinary share R 8.5 7.9
AUDIT OPINION
The auditors, Deloitte & Touche, have audited these results and their
unmodified audit opinion is available for inspection at the company`s
registered office.
CORPORATE INFORMATION
Registered office: Imperial Bank Limited, 24 Achter Road, Paulshof, 2191.
PO Box 6093, Rivonia, 2128.
Transfer secretaries: Computershare Investor Services (Pty) Ltd,
70 Marshall Street, Johannesburg, 2001.
PO Box 61051, Marshalltown, 2107.
Directors: H R Brody: Chairman, R van Wyk: Chief Executive Officer*, O S Arbee,
C J W Ball, L E Bakoro, M J Croucamp, P C W Hibbit*,
N P Mnxasana, P K Ward, P A Wessels. * Executive
Company Secretary: G Tyusha
Sponsor: Nedbank Capital
Reg No.: 1995/012641/06, Incorporated in the Republic of South Africa
Preference share code: IBLP ISIN: ZAE000081675
These results are available on our website
www.imperialbank.co.za
CONDENSED GROUP INCOME STATEMENT
For the year ended Audited Audited
December December
2008 2007
R`000 R`000
Interest and similar income 6 431 739 4 469 435
Interest expense and similar charges 4 699 196 2 978 076
Net interest income 1 732 543 1 491 359
Impairment losses on loans and advances 700 538 412 049
Income from lending activities 1 032 005 1 079 310
Non-interest revenue 87 609 128 144
Operating income 1 119 614 1 207 454
Operating expenditure 524 846 489 321
Net operating income 594 768 718 133
Indirect taxation 51 310 34 049
Profit from operations before direct taxation 543 458 684 084
Direct taxation 182 245 204 930
Net profit for the year 361 213 479 154
CONDENSED GROUP BALANCE SHEET
At Audited Audited
December December
2008 2007
R`000 R`000
Assets
Cash and cash equivalents 46 693 4 468
Other short-term securities 1 563 385 1 105 594
Derivative financial instruments 37 619 74 630
Government and other securities 529 163 330 985
Loans and advances to customers 44 734 236 35 319 543
Other assets 504 787 397 463
Investment securities 5 183 6 151
Property and equipment 279 484 181 395
Mandatory deposits with central bank 1 067 545 808 109
Total assets 48 768 095 38 228 338
Equity and liabilities
Ordinary share capital 3 937 3 400
Ordinary share premium 1 097 747 648 284
Reserves 1 960 630 1 745 502
Total ordinary shareholders` equity 3 062 314 2 397 186
Preference share capital and premium 298 047 298 047
Total shareholders` equity 3 360 361 2 695 233
Total liabilities 45 407 734 35 533 105
Bank overdraft - 32 269
Derivative financial instruments 357 171 90 207
Amounts owed to depositors 43 934 979 34 047 864
Other liabilities 110 712 183 069
Provisions 45 403 67 703
Current taxation 5 706 2 392
Deferred taxation 162 013 109 512
Long-term debt instruments 791 750 1 000 089
Total equity and liabilities 48 768 095 38 228 338
Contingent liabilities 2 515 567 1 540 059
OPERATING DIVISIONS % OF NET PROFIT FOR THE YEAR ENDED 31 DECEMBER 2008
Please see Press for the Graph
CONDENSED GROUP CASH FLOW STATEMENT
For the year ended Audited Audited
December December
2008 2007
R`000 R`000
Cash generated by operating activities 1 364 900 1 109 229
Changes in funds for operating activities (826 524) (1 043 912)
Net cash generated by operating activities before
taxation 538 376 65 317
Taxation paid (174 985) (199 895)
Net cash generated by/(utilised in) operating
activities 363 391 (134 578)
Net cash utilised in investing activities (106 553) (27 900)
Net cash from financing activities 77 092 273 982
Net increase in cash and cash equivalents 333 930 111 504
Cash and cash equivalents at the beginning of the
year 780 308 668 804
Cash and cash equivalents at the end of the year 1 114 238 780 308
CONDENSED GROUP STATEMENT OF CHANGES IN SHAREHOLDERS` EQUITY
For the year ended
Audited Number of Ordinary Ordinary
ordinary share share
shares capital premium
R`000 R`000
Balance at 31 December 2006 288 222 599 2 882 348 802
Transfer to/(from) reserves
Net profit for the year
Preference dividends paid
Revaluation of land and buildings
Ordinary shares issued 51 787 025 518 299 482
Share issue and repurchase expenses
Balance at 31 December 2007 340 009 624 3 400 648 284
Transfer (from)/to reserves
Net profit for the year
Ordinary dividends paid
Preference dividends paid
Revaluation of land and buildings
Ordinary shares issued 53 673 165 537 449 463
Balance at 31 December 2008 393 682 789 3 937 1 097 747
General
Revaluation credit risk Accumulated
reserve reserve profit
R`000 R`000* R`000
Balance at 31 December 2006 - 180 821 1 076 169
Transfer to/(from) reserves 48 550 (48 550)
Net profit for the year 479 154
Preference dividends paid (26 003)
Revaluation of land and
buildings 35 361
Ordinary shares issued
Share issue and repurchase
expenses
Balance at 31 December 2007 35 361 229 371 1 480 770
Transfer (from)/to reserves (229 371) 229 371
Net profit for the year 361 213
Ordinary dividends paid (128 013)
Preference dividends paid (29 895)
Revaluation of land and
buildings 11 823
Ordinary shares issued
Balance at 31 December 2008 47 184 - 1 913 446
Total Preference
ordinary share capital Total
shareholders` and shareholders`
equity premium equity
R`000 R`000 R`000
Balance at 31 December
2006 1 608 674 298 062 1 906 736
Transfer to/(from)
reserves - -
Net profit for the year 479 154 479 154
Preference dividends paid (26 003) (26 003)
Revaluation of land and
buildings 35 361 35 361
Ordinary shares issued 300 000 300 000
Share issue and
repurchase expenses (15) (15)
Balance at 31 December
2007 2 397 186 298 047 2 695 233
Transfer (from)/to
reserves - -
Net profit for the year 361 213 361 213
Ordinary dividends paid (128 013) (128 013)
Preference dividends paid (29 895) (29 895)
Revaluation of land and
buildings 11 823 11 823
Ordinary shares issued 450 000 450 000
Balance at 31 December
2008 3 062 314 298 047 3 360 361
* Represents non-distributable reserves transferred from other distributable
reserves in order to comply with the Bank`s Act, 1990.
OPERATIONAL AND SEGMENTAL REPORTING
For the year ended Total assets (Rbn)
Audited Audited
December December
2008 2007
R`000 R`000
Motor Finance 28.5 22.2
Property Finance 8.0 6.5
Professional Finance 4.9 4.2
Supplier Asset Finance 3.7 2.7
Treasury and Eliminations 3.7 2.6
Total 48.8 38.2
For the year ended Operating income (Rm)
Audited Audited
December December
2008 2007
R`000 R`000
Motor Finance 549.7 607.7
Property Finance 286.1 325.8
Professional Finance 78.5 89.9
Supplier Asset Finance 120.9 140.9
Treasury and Eliminations 84.4 43.2
Total 1 119.6 1 207.5
For the year ended Net profit for the year (Rm)
Audited Audited
December December
2008 2007
R`000 R`000
Motor Finance 134.5 206.8
Property Finance 151.4 170.5
Professional Finance 13.1 19.6
Supplier Asset Finance 32.1 50.5
Treasury and Eliminations 30.1 31.8
Total 361.2 479.2
Date: 19/02/2009 08:00:01 Produced by the JSE SENS Department.
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