JDX takes toll on Pan Caribbean 2Q profit
Published:Sunday | August 8, 2010 | 12:00 AM
Pan Caribbean Financial Services Limited (PCFS) has seen a 38 per cent drop in profit, to J$231 million, resulting from a decline in net-interest income and in the second quarter ending June 30.
For the half year, profits were down 13 per cent to $628 million on the back of a narrow gain in net-interest income. Earnings per share fell from J$1.32 to J$1.14.
During the reporting six months period, PCFS saw a decline in its revenue lines, except for income from fees and commissions.
Fees and commissions increased by 50 per cent to J$204 million, based on significant revenues improvement in credit, asset management and stockbrokerage operations, according to Pan Caribbean.
And while net-interest income advanced marginally by three per cent to J$1.3 billion, from $1.2 billion, interest income from loans, securities and leases all recorded a dip for both the three- and six-month periods.
Higher expenses
Similarly, net-interest margins contracted to 3.94 per cent, PCFS reported, reflecting lower yields on its investment securities portfolio, influenced by the Jamaica Debt Exchange (JDX) in February 2010. Net-trading income showed a decline to J$199 million for the half-year period, while other operating income moved into a negative position, reflecting foreign currency translation losses of J$143 million.
The depressed results were also a reflection of higher expenses, which at four per cent grew at a faster pace than net-interest income. The investment house spent J$733 million on operations, compared to $702 million the previous year, which the company said was due to salary adjustments and increased technology costs.
With five branches spread across the island, PCFS is one of the top brokerage houses serving mainly high-end clients in the market.
At a current trading price of J$18 per share, its more than 547.9 million ordinary shares gives the company a market value of $9.8 billion.
Pan Caribbean's balance sheet assets totalled $69.8 billion, up seven per cent since December 2009. For the reporting period, the company's loan balance amounted to J$8.5 billion, down J$164 million, in an environment in which lenders are creating specials, giveaways, and even cutting rates to entice individual borrowers to buy more loans, while at the same time offering options to defaulting debtors to return to compliance.
At the end of June, Pan Caribbean reported an increase in the ratio of its non-performing loans at 3.1 per cent, up from 2.6 per cent at the end of December.
But the Donovan Perkins-led operation noted in its statement to shareholders that close monitoring of the portfolio and prudent actions would continue to ensure that asset quality ratios remained at acceptable levels.