Sterling achievement as assets pass $1-billion mark

Friday, May 19, 2017

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Offshore investment firm Sterling Investments Limited (SIL) says a 15.6 per cent in investment securities has pushed the company's assets past the $1-billion mark as at the financial year ending March 2017. The company, which is listed on the Jamaica Stock Exchange (JSE), saw total assets increase by approximately 16.5 per cent from $927.6 million as at March 2016 to $1.01 billion as at March 2017.

In a press release from the company, director of SIL Charles Ross said the improvement was attributable to retained earnings, as well as Dividend Reinvestment Programme (DRIP) and Complementary Share Purchase Programme (CSPP) programmes introduced in the second half of 2016.

As at March 2017, margin loans totalled $218.5 million, or 21.1 per cent of the total portfolio of investment securities, compared to 21.7 per cent for March 2016.

“The company's use of margin has boosted the income of the portfolio,” Ross said.

DRIP allows investors to automatically reinvest their cash dividends by purchasing additional equity in the company, thus increasing the value of their investments, while the CSPP allows shareholders to buy new stock from the company on a quarterly basis.

The company's gain on sale of investments for the quarter ended March 2017 was $13.4 million, a substantial increase when compared to the loss of $1.1 million recorded for the corresponding period in 2016.

“The gain was primarily due to the overall improvement in the bond markets, including the high yield and emerging markets,” Ross said.

He noted that increases in net interest margin was attained despite the instability surrounding the election and swearing-in of President Donald Trump. Net interest income, SIL's primary source of income, totalled $17 million for the quarter ended March 2017.

According to Ross, the equity markets were buoyed by the expectation that Trump's promises of tax cuts for businesses and a reduction in regulation would boost the rate of growth of the US economy, and that this would drive up company profits and justify higher stock prices.

“This trend continued for the first quarter of 2017 and began even before he took office in January. Since March, however, the market has traded sideways as investors have seen the difficulty that Trump has had getting legislation passed in Congress, and they are waiting to see if he will be able to deliver higher growth and the large tax cuts that he has promised,” Ross said.

The company is however fairly optimistic about the next 12 to 18 months.

Ross noted that going forward SSL will heighten its focus on the political and policy developments around the world, including the various election outcomes in Europe. In the US, attention will focus on the Trump Administration's policy directives as they unfold in the coming months.




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