FOLLOWING a slowdown in third-quarter earnings, Lasco Financial Services Limited is looking to improve its loan portfolio and rebuild its prepaid card business as it seeks to diversify its earnings.
The cambio and remittance company saw its third-quarter (October to December) revenue shrink 18 per cent to $571.71 million as its remittance service market share began to normalise again, with spreads on foreign currencies being smaller than prior periods. The report referenced the disruption of a key competitor between December 2021 to April 2022 which resulted in increased MoneyGram transactions to the remittance provider.
The competitor in question was Alliance Financial Services Limited, which regained its ability to transact business following its acquisition by Sagicor Group Jamaica Limited.
When combined with a five per cent rise in expenses to $482.86 million plus lower taxes and finance costs, Lasco Financial's net profit dropped 76 per cent to $30.61 million, with earnings per share decreasing from $0.1017 to $0.024.
"General market conditions were not favourable for the company's core services, and the contributions from new services are not yet adequate to compensate for the slower growth in revenues," said Managing Director Jacinth Hall-Tracey in the report.
Alliance's suspension also resulted in the disruption of the co-branded Lasco Pay Mastercard. However, Lasco Financial was able to start issuing its Visa Gold prepaid card under the Bank of Jamaica's Regulatory Sandbox.
Since then, the company has been on an aggressive campaign to market the card alongside its Lasco Biz platform, which has resulted in increased expenses for new talent and promotion of the products.
"We're working on getting back all the Mastercard customers. There was a break between December and July so you can imagine we have to work back to get all those cards. We have some of them already and we anticipate that it might not necessarily be those customers, but we expect to get back to those numbers by the calendar year end," Hall-Tracey commented at a Mayberry Investments briefing in October.
Apart from issuing its own card, Lasco Financial is a direct Visa issuer, which means it can sponsor other entities with their own card programmes or co-brand cards for their customers. The company also deployed more cash as its microfinance subsidiary began to grow its loan book again. Loans stood at $812.73 million in March 2022.
Lasco Microfinance has received a letter of non-objection by the BOJ as it awaits its microcredit licence.
The company's consolidated revenue for the nine months was down four per cent to $1.76 billion; its net profit declined 29 per cent to $187.36 million. Total assets stood at $4.65 billion, with loans and other receivables at $1.88 billion and shareholders' equity at $2.09 billion. Lasco Financial's share price traded down six per cent to $2.47 on Friday.
"As we approach our final quarter in our 2022-2023 financial year we remain focused on those initiatives and strategies that drive growth of our services. We wish to express our appreciation to our customers, our employees, agents and merchants who continue to serve our customers with enthusiasm," Hall-Tracey closed.