25
2014 ANNUAL REPORT
OperatingExpenses
Core operating expenses increased by $137 million or 8.2%.
Apart from normal inflationary increases in the costs incurred
to run the operations of the Group, this increase was also due
to expenses incurred to implement regulatory and compliance
requirements as well as to pursue strategic opportunities.
CAPITAL STRUCTURE
Capital adequacy ratio
The Group’s policy is to diversify its sources of capital, to
allocate capital within the Group efficiently and to maintain
a prudent relationship between capital resources and the risk
of its underlying business. Capital adequacy is monitored by
each member of the Group, employing techniques based on
the guidelines developed by the Basel Committee on Banking
Regulations and Supervisory Practice (the Basel Committee), as
implemented by the respective Central Banks for supervisory
purposes. The risk-based capital guidelines require a minimum
ratio of core capital (Tier I) to risk-weighted assets of 4%, with a
minimum total qualifying capital (Tier II) ratio of 8%. Core (Tier I)
capital comprises mainly of shareholders’equity.
All of the companies within the Group have capital ratios
which are significantly higher than the regulatory requirement.
The Group has maintained a historical dividend payout ratio of
between 40% and 60% of net earnings. The payout ratio this
year is 57.5% compared to 58.4% in 2013.
The strong capital base means the Group is well positioned
to fund its future expansion activities.
2014
2013
Republic Bank Limited
25.77%
27.60%
Republic Finance and Merchant Bank Limited
133.32%
87.00%
Republic Bank (Cayman) Limited
20.83%
15.46%
Republic Bank (Grenada) Limited
15.80%
15.60%
Republic Bank (Guyana) Limited
22.16%
17.86%
Republic Bank (Barbados) Limited
16.02%
21.12%
Atlantic Financial Limited
67.95%
77.63%
(TT$ Millions)
2014
2013
Change
% Change
Restated
Total operating expenses
2,065.6
1,764.9
300.6
17.0%
Less pension costs
(65.5)
(38.3)
(27.3)
-71.2%
Less investment impairment expense
(4.1)
(53.0)
48.9
92.3%
Less goodwill impairment expense
(185.0)
–
(185.0)
-100.0%
Core operating expenses
1,811.0
1,673.6
137.3
8.2%
Trinidad and Tobago
1,518.1
1,236.2
282.0
22.8%
Barbados
325.1
302.0
23.1
7.6%
Cayman/Guyana/Eastern Caribbean
233.4
246.0
(12.6)
-5.1%
Inter-company eliminations
(11.1)
(19.3)
8.2
42.5%
Total
2,065.6
1,764.9
300.6
17.0%
