Although total net operating income fell by 29 per cent over the past nine months to $237.1 million, microcredit financial provider ISP Financial Services saw a 25 per cent jump in net profit to $50.8 million for the period up to September 30, 2020 as loan deployment fell sharply during the period.

The 12-year-old company which listed on the Jamaica Stock Exchange in March 2016 has not been spared from the impacts of COVID-19 with total interest income declining by four per cent to $263.6 million, attributable to the company’s lower loan deployment over the period as total loans only grew by 4 per cent to $821.8 million since December 2019.

Part of this lower deployment, as indicated by ISP principals in their annual report, has been due to a tightening of the micro-finance space as commercial banks enter the space and offer unsecured employer deduction loans. Other operating income experienced a 195 per cent growth to $316,440 as other income surged over the period even when accounting for the foreign exchange loss.

This has also been accompanied by lower expected credit loss (ECL) provision on gross loans which only grew by 20 per cent to $191.3 million as the company accounts for the higher risk of possible default. However, ECL’s provisions charged to the income statement only came up to $30.8 million over the nine months as the worst of the COVID-19 pandemic remains behind the firm.

Despite COVID-19 slowing operations, total operating expenses have dropped by 12 per cent to $186.3 million mainly due to lower staff costs falling by 22 per cent which has come about due to the work-from-home policy which has yielded massive savings to ISP. These reduced expenses allowed ISP to grow net profit by 121 per cent when compared to the 2019 financial year. This is in contrast to the other two listed microcredit companies on the junior market which registered significant declines in their net profit due to the pandemic.

Total assets grew by 5 per cent to $698.5 million as loans net of credit loss provisions totalled $630.5 million while equity rose by 9 per cent to $394.4 million on the backdrop of higher profits and lower total liabilities which closed out the quarter at $304 million.

Although ISP hasn’t indicated what its next move will be, ISP has expressed an interest to either merge or acquire new loan portfolios from other financial institutions. As part of the planned event, ISP has retained the services of an investment bank to structure any potential opportunities which might arise in the space.