Republic Bank clears the air . . . RFHL profits up despite US$28.71M charge to income due to reduced Barbados corporate tax rate

It has come to our attention that, as it relates to the impact of the reduction in the Barbados Corporate Tax rate, the recent media release of the Republic Financial Holdings Limited (RFHL) Annual Group Results has been misrepresented in certain local media editorials, which we now clarify.

Republic Financial Holdings Ltd (RFHL) has recorded an increase in profit for the year ended September 30, 2019, of US $38.66 million or 19.5 per cent over the previous financial year. This performance was despite a charge to its income statement of US$28.71M, the result of the remeasurement of deferred tax assets as a consequence of the reduction in the Barbados’ Corporation Tax rates. Therefore, contrary to recent media editorials, the reduction in the Barbados Corporation Tax rate negatively impacted the RFHL income statement in fiscal 2019.

In making the announcement, Chairman of RFHL, Ronald F. deC. Harford said the Group recorded profit attributable to equity holders of the parent of US$0.24 billion for the year compared to US$0.20 billion reported in the previous financial year.

The Chairman explained that the reduction in Barbados’ corporation tax rate resulted in a charge to the RFHL income statement, one of two one-off adjustments, the other being a write back to the income statement of US$41.21M relating to post-retirement benefits in the bank in Trinidad and Tobago. The net impact of these two one-off adjustments was an increase in profit of US$12.5 million.

“These results include two significant one-off items, the net impact of which increased profits by US$12.5 million. Firstly, the bank in Trinidad and Tobago amended the terms of its post-retirement medical benefits plan in line with market, resulting in a write back net of deferred taxes of US$41.21 million. Secondly, Barbados reduced its corporation tax rate from 30 per cent to a range between 1 per cent and 5 per cent, which resulted in a charge to our income statement of US$28.71 million due to the remeasurement of deferred tax assets at the lower tax rate.”

Harford said excluding the impact of those items, the Group’s core profit was US$0.22 billion, US$26.17 million or 13.2 per cent more than the prior period.

“The increase in core profit was driven mainly by Cayman National Corporation (US$13.86 million) and the RBL Trinidad and Tobago Group (US$5.87 million). Total assets stood at US$13.1 billion at September 30, 2019, an increase of US$2.54 billion or 24.2 per cent over that of the prior year.” (PR)