*Australian Orocobre (OROCF, or, more usefully, ORL-TSX) reported IFRS H1 results for the year ending June 30 today. Its first-ever after-tax profits came in at US7.4 mn as it produced 6,542 metric tonnes of lithium carbonate from its Olaroz lithium facility in Argentina, a rise of 309% from H1 2016. This produced revenues of $60.5 mn, up $56.1 mn from prior year H1. It sold 6,588 T of lithium carbonate at an averaged received price of$9,185/T.

The borax business saw sales rise 14% despite challenging conditions, and borates came close to breakeven in H1.

Gross operating margins hit 62% as Li production cost $3,525/T, excluding royalties and corporate costs. OROCF is one of the lowest cost Li producers on earth. Lithium remains in high demand with tight supply and attractive prices, despite the problems of Tesla and the new hot batteries. CEO Richard Seville said “prices have stabilised at high levels over the last few months. Strong global market fundmentals for lithium carbonate products persist.
He warned that “we recognise a similar scenario as occurred two years ago where timing and quantity of new supply to the global market was significantly overestimated.” The market price is from expecting more Li is coming than will come.

One reason is that Olaroz cut its production guidance for the current FY to 12,000-12,500 tonnes, namely flat, because of pond inventory management issues. The cut is required to keep the solar ponds producing the highest grades of Li which had fallen. To correct this flow problem and re-balance output to higher grades, the sequence design of the solar evaporation ponds will have to be changed over the next 6 months. Olaroz will reallocate how brine goes through the open air ponds and how long evaporation will go on for. It could have just pushed short-term production according to CEO Seville, but opted for “actively managing our operations for long-term performance.” .

That is also why Orocobre is doubling its production in Olaroz to 35,000 tonnes/yr, a project which had been discussed but is now confirmed. Its output will hit the market in ~2 years. OROCF is also building with its partner Toyota Tsusho, a sub of the car-maker, a high-margin 10,000 T/yr lithium hydroxide plant on which work will begin in Japan by the end of next year.

Capex for the rest of the year for Li will be $10-12 mn plus another $2.4 mn for the Borax Argentina mine. Future cash-flow rises will lead to the release of standby letters of credit in Argentina against overdraft facilities, and eventual repayment of shareholder loans from Toyota for $101 mn (as of the end of 2016.) Cash will also be used to fund expansion and improve its operations.

CEO Seville stressed that there is no need to raise more cash which might water our shares. In H1 operating cash flows fully funded principal and interest payments for the Mizuho project loan facility.

Another potential negative is currency. Reporting in US$ but quoted in A$, and producing in Argentine pesos, Orocobre's maiden profits would have been higher but for a forex loss of US$900,000, which may have been to cover hedging losses.

He also forecast that Li prices would hit $10,000 in the current quarter, up about 10%.

It closed the half with cash on hand of $30.7 mn and debt at only 2.1x cash flow (annualized and consolidated proportionately.) OROCF fell by over 10% at the opening but later recovered. Now it is off 11.7%, a screaming BUY.

*Virgin Money had a bang-up 2016 thanks to increased business brought in by its digital channels and its good reputation for how its customers are treated. Loan balances rose 19% and customer numbers rose by 35,000 per month while its strict asset quality rules continued to function. Profit before tax came in at £213.3 mn, up by a third from 2015. Return on tangible equity rose from 10.9% to 12.4%. Underlying EPS came in at 32.7 pence, up 28% from 2015, but of course lower in US money. The same for the dividend, which is up 13% in sterling at 5.1 pence/sh.

CEO Jayne-Anne Gadhia argues that VRGDF's “market-beating growth in core mortgages, savings, and credit card business” were based on “outstanding customer approval ratings” which rose from 19% to 29% in the year and “improved customer retention.”

Virgin Money makes it easy for customers to give charity with a non-for-profit app. £92 mn was raised by charities last year and the Virgin Money Foundation distributed almost £2 mn in matching grants.

She cited Virgin's focus on customer service as behind its 17% growth in mortgage balances to £29.7 bn, much higher than the UK average; its 55% growth in prime credit card balances to reach £2.4 bn, well on the way to hitting its end-2017 target of £3 bn; and its 12% rise in savings deposits to £28.1 bn. Virgin after the monthly rises already cited now has a 15% higher customer base of 3,300,000 Britons.

CEO Gadhia promised to build out the digital side which will be “transformational” while also partnering with Virgin Red, to give its customers access to deals from the full range of Virgin companies. Its digital partner is 10x Future Technologies and last year 82% of transactions were carried out digitally already by on-line and mobile apps which are being scaled up.

Virgin also plans to build out its fledgling financial services arm to generate fee income, expected to reach 10% this year.

While Virgin originated £29.7 bn in mortgages it gross mortgage lending only rose 12% to £8.4 bn, or 3.45 of the UK market, as it refinanced in the market to cut risks, mostly with its corporate partner insurer Legal and General. Its credit card balances rose much faster and were not refinanced (because Virgin knows its customers for other products) hitting 3.5% of the UK credit card market. Without its prudent mortgage refinancing, Virgin Money would be running a nearly balanced banking book because it has £28.1 bn in retail deposits (liabilities), meaning it doesn't have to borrow on the money market for funding its loan book. Last year its deposits from other banks came to £2.133 bn on total deposits of £28.11 bn. It also has debt securities out worth £2.6 bn plus equity (us) of a mere £1.671 bn.

One result is that Virgin's Tier 1 equity capitalization is a very sound 15.2%. Its leverage is 4.4% which is very low, and these factors also mean its cost of risk is minuscule, at 0.13% of assets (mortgages, credit card, and other debt.) This Virgin is prudent in underwriting and wise in her credit quality terms, and it shows. Only 0.15% of mortgages are in arrears for more than 3 months at Virgin, vs 1% on average for UK banks and other lenders. Credit card cost of risk in 2016 fell to 1.7% from 2% the year before—despite Brexit.

It also managed to thrive despite low net interest margin, the difference between the cost and return of money, to 160 basis points on average in 2016 which Virgin Money expects to repeat this year.

Easier Results Reporting?

*US investors have problems getting results from Virgin Money or Orocobre from their brokers because they trade here on the pink sheets if at all.

The next result should be a slam dunk from the point of view of a reporter, Bank of Nova Scotia, which reported on its Fiscal Year Q1 today. Up in Nova Scotia it traditionally closed its FY at the end of October, and while now Canada's most international bank, it sticks to tradition. It reports in C$s under IFRS (international financial reporting standards as do VRGDF and OROCF).

BNS matched consensus forecasts before adjustments. But adjusted diluted net earnings of C$1.95 bn (US$1.5 bn) in the quarter or 1.57/sh, were up just under 11% and 10% that missed forecasts by 2 loony pennies/sh. Its revenues rose 7.9% to C$6.87 bn, marginally below the average analyst forecast. The problem was mostly in Canada rather than in its Latin America specialized markets. It hit a quarterly record for its international business which rose 28% hitting a level of over $500 mn for the 6^th quarter in a row, thanks to new business in the Pacific Rim.

CEO Brian Porter said “Scotiabank entered the year in a strong position and we have seen good earnings momentum continue across all 3 of our businesses” Canada, International (ie foreign), and Global (meanng corporate and markets business.) He cited its 11.3% tier 1 capital ratio. He also cited a digital upgrade for the medium term which aims at 70% digital adoption by its customers, 50% digital retail sales and fewer than 10% of transactions done in (yeck) branches. Mr Porter cited digital “factories” replacing costly branches in Toronto, Mexico, Peru, Chile, and Colombia which cut costs for the bank.

Overall the difference between its cost of money and what it lent for hit C$3.64 bn but the devil is in the details. While net margins in Canada improved, both sequentially and y/y, this was nipped by non-interest expenses and loss provisions. So its net interest income rose a mere 3%. The same figure for its international banking side rose 5% y/y after adjusting for the impact of foreign currency conversion, or 18% Y/Y. The global banking and markets arm produced a 28% rise to $469 mn, thanks to higher contributions from fixed income, corporate loans in Europe and Canada paying better, and lower loan loss provisions.

The net loss outside banking which hit shareholders was $78 mn from lower gains on investment securities, losses from forex including hedging, and higher expenses. Meanwhile non lending business rose 13% to $3.23 bn. The lending business was hurt by the rise in provisions for bad loans, to C$553 mn, from $550 mn in Q4 2015-6, and from $509 mn in Q1. Its straight loan business is an ill omen for other Canadian banks which report later.

Another trouble spot is the higher payout to preferred shareholders for the second quarter in a row which is the main reason for the miss in EPS on common shares

BNS upped its return on equity to 14.3% from prior year's 13.8% thanks to what CEO Porter called “focus on reducing structural costs.” It also raised its quarterly dividend payable April 4 to 76 loony cents, up 2 cents.

BNS stock fell over 4% today on Wall St.