Access Financial Services — a prominent microlender — posted a 205 per cent increase in net profit at $35.2 million for its September third quarter year on year but the market actually cut the stock price by 10 per cent.

Marcus James chief executive officer said the significant increase in profit was as a result of overall operating efficiency and improvement in business. Its total revenue for the quarter rose 25.8 per cent to $111.3 million year on year whilst total expenses increased 21 per cent to $71.4 million.

“Growth in profitability was attributed to a 10 per cent increase in loan portfolio. Notably, loan disbursement for the quarter increased by 18 per cent when compared with the second quarter of 2010,” he said in a media release.

Access was able to achieve better results despite the ongoing financial crisis, it stated: “The increase was primarily driven by an increase in other operating expenses as the company continues to invest internally to meet its growth. Management continues to adopt a conservative approach in providing for loan losses”.

The microlender’s interest income from loans grew from $76.3 million to $96.6 million at end-September 2010. Net trading income increased from $67.4 million for the third quarter of 2009 to $95.7 million for the comparative 2010 quarter. As a result of these gains, return on equity and earning per share for the nine months period ending September was 38 per cent and $0.38 respectively compared with 32 per cent and $0.13 for the corresponding period in 2009.

Following the release of the financials however the stock lost 10 per cent of its value from $5.00 to $4.50. In May the stock price closed at $5.30. When it first went to market earlier this year, it raised $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. In April it had a 10-to-one stock split which led to more frequent trading and a 49 per cent appreciation in share price.

Prior to the split trading could be categorised as sporadic 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.

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. The firm is able to secure net interest margin of nearly 90 per cent.