Access Financial Services Limited posted a 199 per cent increase in net profit in their first quarter for the period ended March 31, 2010 over the comparative period last year, while the value of its stock is closed at 189 per cent higher than it listed last October.

The microlender recorded net profit of $39.16 million up from $13 million in the March quarter of 2009 reflecting overall better results from its operations even while pretax profit rose from $20.4 million to $39.16 million over the comparative periods.

Yesterday the stock price closed at $5.30 a share up 61 cents.

When it first went to market $100 million through the issue of 5.47 million shares in the company, but some elements of the market viewed the absolute price of the share as being high at $18.34 a share.

“By splitting the shares it brought down that absolute number even though it does not affect the value of the shares,” Access CEO Marcus James told the Business Observer. “It also has the effect of increasing the trading volume.”

Indeed the 10-to-one stock split, which took effect on April 27, led to more frequent trading and a 49 per cent appreciation in share price.

Prior to the split trading could be categorised as sparodic with trading taking place on average once every four days. Since the split, shares crossed the floor on all but two of the 16 trading days.

A major beneficiary of the Access’ success on the Jamaica Stock Exchange Junior Market is Mayberry Investments Limited (MIL), which in 2006 paid $38.4 million for its stake in the company that is now valued at $570 million even after dropping 10 per cent ownership in the company in the public offer.

James said the significant increase in profit was as a result of overall operating efficiency and improvement in business.

“All business units recorded an increase in business. That is what really accounted for the increase in revenue,” he told the Business Observer. James said the new branches of Access, opened in the latter part of 2009, were also meeting their production budget.

“It is because of overall operations. Once you roll out a new branch and once these new branches start to become more productive the overall productivity of the company improves,” James said.

Despite the financial crisis which has continued into 2010, total income for the quarter rose 43 per cent to $107.9 million and the performance summary indicates that all business units contributed to this increase in income. Interest income from loans grew from $63.9 million to $94.7 millino on loan portfolio growth — from $333.5 million at end-March 2009 to $440.5 million at end-March 2010. Net trading income increased 57 per cent from $57.5 million for the first quarter of 2009 to $90.2 million for the comparative quarter this year. Money service income also increased moving from $8.3 million to $9.4 million. As a result of these gains, Earning Per Share (EPS) increased from $0.47 to $1.43 quarter on quarter.

With a reduction in lending rates and a more favourable loans market, the commercial banks are now moving more aggressively to sell loans. James said Access will stick to its core business and continue the expansion of its branch network this year.

“I don’t really see that there will be a significant impact on our operations as a result of that,” he said “But we have to ensure that we remain agile to ensure that we are able to capture a larger share of the micro business loans markets.”

He added that the performance results seen so far are due to continue going forward.

“For the first three quarters you will continue to see an increase in profit before tax and compounded after tax because we don’t have that tax liability that will impact on the bottom line,” James said. “But the business is strong and we anticipate strong performance going forward.”

Companies, such as Access, that are listed on the Junior Stock Exchange get a 10-year tax break.

Access’ primary business, which involves lending money to consumers and small businesses and which the company plans to expand, is highly profitable. For instance, during the six months to June 30, 2009, the firm was able to secure net interest margin of 86 per cent, that is, the cost of loans which yielded $128 million in interest income for Access was only $18 million, so the company was able to make $112 million in net interest income.

The microlender also made another $17 million from money services, which includes the operations of cambios, Bill Express, Western Union and FX Trader services at its branches in Port Henderson, May Pen and Savanna-la-Mar. It also has cambio operations at its head office in Kingston.