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Barita reports super profits for June quarter

Third-consecutive quarter of record profits

BY DURRANT PATE
Observer writer

Wednesday, July 10, 2019

Barita Investment Limited is boasting about its latest financial performance in which net profits increased by a massive 670.7 per cent for the nine-month period ended June 30, 2019.

In its unaudited financial statements for the period under review, net profits went up by $1.4 billion relative to the same period in 2018. Barita, which has the distinction of being one of the oldest stockbroking companies in Jamaica, recorded net profits of $911.9 million for the June quarter, which represents the third-consecutive quarter of record profits.

Barita chairman, Mark Myers credited the positive financial performance to the management's focus on revenue growth and diversification. According to Myers, “the sharp movement in profitability was primarily attributed to the continued growth in revenues through the addition of new business lines, coupled with improvements in our traditional revenues sources.”

Net profit for the nine-month period ended June 30, 2019 translated to earnings per share (EPS) of $2.26, after considering the bonus element of its recent rights issue relative to the $0.30 EPS for the same period in 2018.

Non- interest income grew by a mammoth 344.9 per cent or $1.8 billion to $2.4 billion, relative to the $534.8 reported for the nine-month period ended June 2018. The unaudited financial statement published on the website of the Jamaica Stock Exchange on Monday stated that “the most significant drivers of this growth were gains on investment activities of $1.1 billion and fee income of $721.6 million.

Non-interest income as a percentage of net revenues rose to 84.5 per cent, up from 63.5 per cent in the previous year, which is consistent with Barita's strategic objective of growing this revenue segment towards commanding a greater share of net revenues. Net interest income registered a $129.9 million or 43 per cent increase to $436.9 million, due to a combination of increased portfolio size and improved net interest margin management.

 

SUCCESFUL $4-B RIGHTS ISSUE PROPELS BALANCE SHEET

In his chairman's report, Myers pointed out that “the increase in our balance sheet size was driven primarily by our equity raised at the end of the first quarter, together with growth in repo liabilities”. Barita raised $4 billion in a right issue in March this year.

Sagicor Investments acted as arranger and broker for the transaction that allowed existing Barita shareholders the opportunity to purchase an additional 262,280,484 ordinary shares in the company, founded by Rita Humphries-Lewin in 1977 but now majority owned by Cornerstone Investment Holdings, which acquired majority shares in August 2018.

The allotment allowed shareholders access to 10 additional shares for every 17 shares owned. Each new share was offered at a cost of $15.50 each.

 

GAINS ON INVESTMENT ACTIVITIES AND FX TRADING

This was another massive growth area comprising cambio operations and proprietary trading portfolio, which increased by a whopping 756.8 per cent to $1.3 billion for the period under review when compared to the $154.6 million earned during the same period in 2018. This was largely driven by fair value gains on investment ($1.03 billion), gains on sale of investment ($203.9 million) for the period, and foreign exchange trading income ($88.6 million).

In concluding, the Barita chairman painted a positive outlook for the remainder of the year, highlighting the positive prospects for the deployment of capital in the various initiatives towards diversifying and growing the investment banking and brokerage house revenue base.

”In the near term we intend to place continued focus on the active management of all balance sheet exposures to market risk and the continued expansion of fee-based revenue from our asset management and investment banking divisions,” Myers reported.

He continued, “We expect growth in these core revenue segments to be underpinned by continued investments in talents, product development, [thereby] bolstering our wealth advisory division and capitalisation of the business.”