Barita plans new product push to offset income loss
Published:Wednesday | June 23, 2010 | 12:00 AM
Barita Investment Limited is eager to expand its product offering to cauterise the loss of income stemming from Jamaica Debt Exchange (JDX), the strengthening of the Jamaican dollar and the financial sector's move away from heavy reliance on repurchase agreement (repo) business.
But the company is not quite there yet in its plans to roll out a new foreign currency-denominated unit trust product and individual retirement account, as the process of registration and sign off by regulator, Financial Services Commission (FSC), is not yet completed.
"Apart from the two funds that we already have, the capital growth fund and money market fund, we are hoping to create a foreign exchange fund, and right now we are in the process of registering the fund with the FSC," said Karl Lewin, managing director of BIL's subsidiary, Barita Unit Trusts Management Company Limited.
The repo market, he told shareholders at Barita's annual general meeting last Thursday, was not doing as well as it used to.
Additional product
"With the drive away from repos and pushing business into mutual funds, we are trying to come up with an additional product to be able to meet the demand created with the downturn in repo business," he said.
The retirement scheme, which marks Barita's entry into a new line of business for the three-decade-old firm which went public earlier this year, is not expected to be ready for launch this year.
Barita for its six-month results experienced a plunge in profit, from J$87 million in the 2009 period to J$33 million this year.
The company also shed significant amounts of repo assets over the past year, ending March 2010 with a J$1.2 billion portfolio, down almost J$3.8 billion from J$5 billion in March 2009, but added more than J$2.2 billion of marketable securities.
Its total assets dropped from J$13 billion to J$11.5 billion in the same period.
The company expects its performance going forward to be further tempered by the JDX and the dollar.
"The second half of the year could be impacted by the JDX and the continued revaluation of the Jamaican dollar seeing
At the same time, the Barita chairman said the JDX fallout was proving less severe than initially expected, coming in, up to March, at less than the 20 per cent drop in interest income projected.
Maintaining profit growth
"We will strive to maintain our steady performance and as the economic fundamentals stabilise we will continue to work hard to maintain our profit growth by year-end," Humphries-Lewin told shareholders.
She also told shareholders that Barita hopes to create synergies between the retirement scheme and the unit trust operation.
The latter, however, first requires the creation of a pension fund management company, the vehicle to be used for offering the product on the market.
"We are not mid-way yet because that involves some additional work based on what the FSC has informed us," said Hunphries-Lewin.
"We figure the unit trust is an ideal product to push people into the IRA. The unit trust fund is really a fund which attracts a lot of small people and we figure that the IRA will attract a lot of professional and smaller people who are not part of a pension scheme."
The firm's unit trust operation manages about J$1.5 billion.
Barita made its debut on the Jamaica Stock Exchange in January.