City Trust owns 7.28% (needs to be confirmed) of I&M Bank therefore it cannot report (per IAS) the proportionate share of I&M's profits on its books. The only 'profits' are the dividends it receives & interest earned.

If I&M Bank (which recently bought 55% of BCR of Rwanda) retains most of its earnings for expansion, growth or other requirements - better capital ratios or reinvestment - then the 'profit' for City Trust will be relatively low.

A better calculation is the 'look-through' method which means you use 7.28% of I&M's profits as the proxy for City Trust's 'real' profits. Then divide this PAT by the number of shares City Trust has. The EPS derived in this manner is approximately 50/-.

*There may be some variations based on:
1) The % ownership of I&M by City Trust. If you look carefully, you will see 100,000 shares were issued recently & these were to employees of I&M under an ESOP. Whereas this would dilute City Trust's %, it is a good tool to buy loyalty of employees.
2) The 2Q results seemed 'poor' vs 1Q but 3Q should see a boost from BCR's acquisition completed in July 2012.
3) The recent decrease in T-Bond yields should provide a boost in the valuation of the Bond portfolio*

City trust owns circa 7.3% of I&M Bank. City trust should therefore account for I&M as an associate just the same way Coop Bank accounts for CIC. The share of profit from associate should reflect in the bottom line.

The 100,000 ESOP shares issued last year are too few and therefore they made an insignificant impact on the shareholders list.

That said, if you are not already a shareholder of the bank, do not over-anticipate the listing. We have come to see good companies listing at very exploitative price per share as existing shareholders make their kill

Tx @VVS. Am surprised that even with such a shareholding, Citi Trust has no representation in the Board. Proparco which has a similar holding in the Bank is well represented in the Board.

Citibank has also recorded impressive 100% growth in PBT for the 6 months to June 12 (DNpg15). This is mainly from interest income which grew by 189% from loans and advances and partly from government securities. Loans and advances however declined in the period from 29bn to 28bn.

Consolidated bank on the other had increased its loan book from 7bn to 9bn (DNpg23). While interest income grew by over 100%, it was eroded by higher interest expenses making the growth in PBT to be just 7%.

High interest rate have not favoured Tier II banks which have wholesale deposits and very few cheap deposits from the mass market. As interest rates decline, they stand to gain the most.