Sterling Investments records significant growth despite COVID-19Wednesday, March 03, 2021
Despite the devastating economic disruption caused by the novel coronavirus pandemic, Sterling Investments Limited (SIL) was able to record significant growth in its 2020 financial year.
The investment holding company, which is managed by Sterling Asset Management, for the period under review, recorded net profit of $134.3 million, a 31 per cent increase when compared with the $101.2 million recorded in the previous corresponding period.
This, according to SIL in its December 2020 year-end report to shareholders, was driven by the increases in interest income, the decline in interest expense and the increase in foreign exchange gains.
Net interest income increased by 22 per cent from $98.3 million in 2019 to $120.3 million in 2020. Total interest expense declined by 11 per cent to $11.4 million in 2020 — the result of a reduction in interest rates by the Federal Reserve.
Foreign exchange gains increased by 80 per cent from $43.9 million in 2019 to $79.2 million in 2020. The Jamaican dollar depreciated against the US dollar by 7.6 per cent for the twelve-month period ended December 2020.
SIL invests in fixed income and equity investments across the globe.
Total assets for the period under review grew by over 17 per cent to $1.93 billion, from the $1.63 billion recorded for the corresponding period in 2019.
“At the depths of the market decline, SIL was able to strategically purchase undervalued securities which have subsequently risen in value. The company's prudent use of leverage further enhanced shareholder returns and helped to drive the income and gains enjoyed by the portfolio,” SIL stated, noting that the larger asset base resulted in higher income levels.
SIL was also able to increase the tax-free US dollar dividends it pays to its shareholders during a time of great uncertainty, by increasing its dividend payout ratio to 80 per cent.
“Investors will continue to benefit from the US dollar income SIL's portfolio generates through dividend payments. SIL's exposure to the developed countries suggests that it will be among the first companies on the local stock exchange to benefit from a global economic recovery,” the company stated.
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