For a busi­ness jour­nal­ist, one of the high­lights of 2024 was the hon­esty of the com­ments made by Min­is­ter of Fi­nance, Colm Im­bert, in his June af­fi­davit on the T&T Rev­enue Au­thor­i­ty law­suit that the Gov­ern­ment de­fend­ed all the way to the Privy Coun­cil...and won.

In that af­fi­davit, Mr Im­bert said:

“The in­ter­na­tion­al price for oil and gas is not ex­pect­ed to in­crease sig­nif­i­cant­ly in the near fu­ture. Fur­ther, Trinidad and To­ba­go is a ma­ture en­er­gy province, hav­ing pro­duced oil for over 100 years, and is chal­lenged by nat­ur­al de­clines in oil and gas pro­duc­tion.

“In fact, oil pro­duc­tion in this coun­try is half of what it was 15 years ago, and gas pro­duc­tion is 35 per cent less than what it was 10 years ago. Such pro­duc­tion is not ex­pect­ed to im­prove un­til 2027, when it is ex­pect­ed that gas from Venezuela should be­come avail­able to the coun­try.

“Ac­cord­ing­ly, the next three years will be very chal­leng­ing for the coun­try from a rev­enue per­spec­tive. In fact, un­less ad­di­tion­al tax rev­enue can be col­lect­ed through the im­prove­ments in tax ad­min­is­tra­tion that will come with a ful­ly op­er­a­tional Rev­enue Au­thor­i­ty, the Gov­ern­ment will soon be faced with very dif­fi­cult choic­es in terms of main­tain­ing the cur­rent lev­els of sub­si­dies, grants, free ser­vices, and so­cial pro­grammes.

“No­tably, as the Gov­ern­ment grap­ples with sig­nif­i­cant­ly re­duced rev­enues, there are de­mands for more and more Gov­ern­ment ex­pen­di­ture on in­fra­struc­ture and so­cial pro­grammes.”

So the ques­tion is this: If the pe­ri­od up to 2027 is go­ing to be “very chal­leng­ing,” what would be­come of the in­vestors in the lo­cal stock mar­ket, who are seek­ing to achieve a re­turn that is sig­nif­i­cant­ly high­er than the rate of in­fla­tion?

Un­less there is some dra­mat­ic in­ter­ven­tion by a deep-pock­et­ed en­ti­ty or in­sti­tu­tion, I would imag­ine that the prospect of earn­ing a pos­i­tive re­turn from the lo­cal stock mar­ket in the near fu­ture does not look bright.

As at De­cem­ber 27, 2024, all three of the ma­jor in­dices of the Trinidad and To­ba­go Stock Ex­change (TTSE) had de­cline year to date: the Com­pos­ite In­dex was down by 11.26 per cent; All T&T In­dex by 13.20 per cent and the Cross-List­ed In­dex by 4.70 per cent.

Last year was the third year of de­cline for the TTSE in­dices as the Com­pos­ite In­dex fell by 8.87 per cent in 2023 and by 11 per cent in 2022; the All T&T In­dex was down by 9.8 per cent in 2023 and 3.69 in 2022, while the Cross-List­ed In­dex closed low­er by 4.75 per cent in 2023 and by 29.90 per cent in 2022.

As of the close of trad­ing on Mon­day, De­cem­ber 30, the Com­pos­ite In­dex stood at 1,071.39. At the start of trad­ing in Jan­u­ary 2014, the Com­pos­ite In­dex was 1185.05, which means that that in­dex was down by 9.59 per cent over the ten-year pe­ri­od.

What’s more is that in the 2014 to 2024 pe­ri­od, there have been two years dur­ing which the Com­pos­ite In­dex of the TTSE ex­pe­ri­enced dou­ble-dig­it growth—2021 when that in­dex was up by 13.14 per cent and 2019 when it ad­vanced by 12.74 per cent.

In 2024, as of the De­cem­ber 27 re­port of West In­dies Stock­bro­kers (WISE), share prices were down across the board: of the 24 com­pa­nies list­ed on the first-tier mar­ket—which ex­cludes com­pa­nies in the SME Mar­ket, the mu­tu­al fund mar­ket, the USD eq­ui­ty mar­ket, the sec­ond-tier mar­ket and non-sec­tor com­pa­nies—on­ly three com­pa­nies had pos­i­tive re­turns: CIBC Caribbean Bank, which was up by 22.16 per cent; ANSA McAL, which was high­er by 10.61 per cent and Unilever Caribbean, with an in­crease of 1.79 per cent.

That means the 21 oth­er com­pa­nies in the first-tier mar­ket de­clined. It al­so means that Unilever was the on­ly one of sev­en com­pa­nies list­ed in the man­u­fac­tur­ing com­po­nent of the first-tier mar­ket; all four com­pa­nies in the non-bank­ing/fi­nance sec­tor de­clined and four of the five list­ed banks were down for the year.

For me, the bank­ing sec­tor is par­tic­u­lar­ly in­ter­est­ing: Three of the five banks list­ed on the T&T Stock Ex­change de­rive most of their prof­its from their T&T op­er­a­tions. Those banks, of course, are Re­pub­lic Fi­nan­cial Hold­ings Ltd (RFHL), First Cit­i­zens Group Fi­nan­cial Hold­ings (First Cit­i­zens) and Sco­tia­bank T&T.

From my cal­cu­la­tions, those three banks de­clared an af­ter-tax prof­it of $3.88 bil­lion in their 2024 fi­nan­cial years:

• RFHL’s au­dit­ed af­ter-tax prof­it for its fi­nan­cial year end­ed Sep­tem­ber 30, 2024 to­talled $2.272 bil­lion. That was a 17.59 per cent in­crease com­pared to its 2023 af­ter-tax prof­it of $1.932 bil­lion;

• First Cit­i­zens de­clared au­dit­ed af­ter-tax prof­it of $956.910 mil­lion for its fi­nan­cial year end­ed Sep­tem­ber 30, 2024. That was an in­crease of 23.19 per cent com­pared to the $776.75 mil­lion it earned in its 2023 fi­nan­cial year; and

• Sco­tia­bank T&T’s unau­dit­ed af­ter-tax prof­it for its fi­nan­cial year end­ed Oc­to­ber 31, 2024 was $658.494 mil­lion, which was an in­crease of less than 1 per cent com­pared to the re­stat­ed, unau­dit­ed prof­it of $655.315 mil­lion in its 2023 fi­nan­cial year.

How does any­one ex­plain the fact that RFHL’s af­ter-tax prof­it in­creased by 17.5 per cent in 2024 over 2023, but its share price was down by 8.07 per cent for 2024 up to De­cem­ber 27?

And how does any­one ex­plain First Cit­i­zens prof­it af­ter tax in­creas­ing by 23.19 per cent in 2024 over 2023, and its share price drop­ping by 17.53 per cent, for 2024, as at De­cem­ber 27?

RFHL is quite like­ly to be the stock that is most wide­ly held by T&T in­di­vid­u­als, com­pa­nies and in­sti­tu­tions.

The pay­out of $5.70 in div­i­dends over the four quar­ters of 2024, is an im­prove­ment com­pared to the $5.20 the share­hold­ers of the com­pa­ny re­ceived in two pay­ments in 2023, many RFHL share­hold­ers are still han­ker­ing for the fi­nan­cial hold­ing com­pa­ny to get back to the hal­cy­on days of 2022 when the stock trad­ed at over $140 per share.

Share­hold­ers of RFHL should be grat­i­fied to know that “con­nect­ed par­ties” of the bank’s di­rec­tors and se­nior of­fi­cers have re­gained their ap­petite to ac­quire the RFHL shares with three ac­qui­si­tions in No­vem­ber and De­cem­ber last year.