Barita scores with net interest income but profits plunge
Published:Friday | May 14, 2010 | 12:00 AM
Barita Investments Limited came close to doubling its net interest income in the half-year ending March 2010, but a confluence of increased administrative expenses, reduced foreign-exchange gains and dividend income, slightly offset by gains on the sale of investments, sliced deeply into profit.
At the close of the period, the newly listed company reported strengthened net interest income of J$133 million, compared to J$76 million made at HY 2009.
But net revenue took a hit, dropping from J$260 million to J$219 million, largely because of the near J$105-million decline in forex trading and translation gains as the Jamaican currency found its footing and stabilised on the spot market.
Barita's second quarter, by contrast, performed opposite to the half-year results, with profits doubling from J$21 million to J$46 million on the back of doubled net interest income of J$79 million in the January-March period.
operating costs grow
At half-year, however, operating profit was also about a third of last year's levels - at J$43 million compared to J$112 million - because of rising staff costs and administrative expenses.
At J$98 million, Barita spent 45 cents per revenue dollar to pay staff, compared to J$86 million, or 33 cents per revenue dollar, in its six-month period last year.
Staff costs rose 14 per cent this period, while administrative expenses climbed 25 per cent to J$78 million.
Meanwhile, net revenue fell 16 per cent; and net profit declined 62 per cent, from 20 cents per share to eight cents per share.
The company said it made a profit "despite lower volumes traded in fixed income, the impact of the JDX, and a relatively weak stock market."
The Jamaica Debt Exchange (JDX) in February swapped J$701 billion of domestic bonds for issues with longer tenures and coupon rates six percentage points lower, on average.
Barita said it expects its fixed-income revenue streams to be negatively affected by the JDX going forward, but that it planned to offset the lower inflows by leveraging other business lines and through new product placements.
Its financial position was enhanced by the IPO proceeds - growing stated capital and new preference-share issues to a combined J$768 million, compared to J$63 million in 2009.
The company's capital base rose to J$1.2 billion, or J$2.71 book value per share, from J$714 million, or J$1.91 BPS.
Barita currently manages assets of J$11.5 billion.