BARITA Investments Limited posted a profit after tax of $32.3 million for the three months ended December 31, 2010, which was a reversal of the $13 million loss the company incurred a year earlier.

The results, according to Barita’s general manager Ian McNaughton, were a combination of the preparation and opportunity.

The low interest rates environment last year, brought its own set of challenges, but also brought opportunities that were translated by the securities firm into the vastly improved quarterly results.

“This improved performance was in large part due to the improved margins on our fixed income portfolio. Despite the reduced interest income, the management of our repo liability portfolio in an environment of falling interest rates enabled us to improve our net interest income revenue streams,” McNaughton told the Business Observer yesterday.

“This coupled with improved trading activity on our assets, the innovative introduction of our Tuition Builder product which bolstered our Unit Trust revenues also improved our non-interest income revenues.”

Indeed, while revenue from interest income fell 16 per cent, the interest cost of repurchase agreements fell by a greater margin of 34 per cent or by $117.3 million resulting in an overall growth in net interest income of $54.5 million, or 102 per cent more than that earned in the corresponding quarter of 2009.

McNaughton also pointed to the aggressive monitoring of expenses, a strategy on which the company has relied since last year when a revitalisation of the financial sector became necessary. Barita cut costs, and reduced staff levels.

“Each line item of our expenses is constantly monitored to ensure that inefficient expenditure patterns are reduced or eliminated. Rationalisation in some areas of staff costs resulted in improved efficiencies which translated into lower costs,” McNaughton outlined.

Staff costs continued to decline in the quarter under review, declining by $4.6 million to $50 million, while administration costs held steady at $35 million. Operating expenses for the period therefore declined to $85 million, down from the $90 million reported in prior year’s quarter.

While there were many gains, the continued revaluation of the Jamaican dollar against the benchmark US dollar and the Euro has caused some losses where the institution’s holdings of those currencies are affected.

Currency losses totalling $7 million was reported in the period under review, a sigificant decline in the $4 million gain for the similar period last year. However, McNaughton said Barita is well poised to continue its creditable performance in the coming fiscal year.

“2011 will be a challenging year, however we will continue to improve our efficiencies, manage our costs and of course look for every opportunity to increase our revenues,” he said.